Problem 5-2B (Concluded)
July 17 Cash……………………………………………………….. 9,457
Sales Discounts*……………………………………… 193
Accounts Receivable—Brill………………… 9,650
Collected receivable within discount period.
*($11,500 – $1,850) x 2%
20 Accounts Payable—Rupert*……………………… 12,700
Merchandise Inventory**……………………. 122
Cash…………………………………………………. 12,578
Paid payable within discount period.
*$14,200 + $500 – $2,000 = $12,700
**($14,200 – $2,000) x 1% = $122
5-1
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Problem 5-3B (40 minutes)
1. Net sales
Sales……………………………………………………………………. $332,650
2. Cost of merchandise purchased
Invoice cost of merchandise purchases…………………. $138,500
5-2
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Problem 5-3B (Continued)
3. Multiple-step income statement
BARKLEY COMPANY
Income Statement
For Year Ended March 31, 2015
Sales $332,650
Less: Sales discounts $ 5,875
Sales returns and allowances 20 ,000
25,875
Net sales 306,775
Cost of goods sold * 115 ,600
Gross profit 191,175
*Cost of goods sold (alternative computation):
5-3
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Problem 5-3B (Concluded)
4. Single-step income statement
BARKLEY COMPANY
Income Statement
For Year Ended March 31, 2015
Net sales $306,775
Expenses
*From Part 3.
Problem 5-4B (30 minutes)
Part 1
Closing entries
March 31 Sales ……………………………………………………….. 332,650
Income Summary………………………………….. 332,650
To close temporary accounts with credit balances.
March 31 Income Summary……………………………………… 277,475
Sales Discounts …………………………………… 5,875
March 31 Income Summary……………………………………… 55,175
March 31 C. Barkley, Capital…………………………………….. 3,000
5-4
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Problem 5-4B (Concluded)
Part 2
The first step is to determine the amount of purchases that were subject to
a discount during the year:
This amount is used to determine the maximum discount, which is then
compared to the actual discount:
As a percent of available discounts ($1,004/$3,954)..……….. 25.4%
This analysis suggests that about 25% of available discounts have been
Part 3
First, we compute this year’s sales returns and allowances rate:
This calculation shows that the company’s customers are returning or
5-5
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Problem 5-5B (60 Minutes)
Part 1
Adjustment (a)
Oct. 31 Store Supplies Expense…………………………….. 6,000
Adjustment (b)
Adjustment (c)
Adjustment (d)
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Problem 5-5B (Continued)
Part 2 Multiple-step income statement
FOSTER PRODUCTS COMPANY
Income Statement
For Year Ended October 31, 2015
Sales……………………………………………………………… $227,100
Less: Sales discounts……………………………………. $ 1,000
Sales returns and allowances………………… 5 ,000
6,000
Net sales………………………………………………………… 221,100
Cost of goods sold *……………………………………….. 78 ,500
Gross profit……………………………………………………. 142,600
Expenses
* $78,500 = $75,800 + $2,700 (shrinkage)
** Salaries and rent expenses are equally divided between selling and general and administrative.
Part 3 Single-step income statement
FOSTER PRODUCTS COMPANY
Income Statement
For Year Ended October 31, 2015
Net sales………………………………………………………… $221,100
Expenses
* From part 2
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Problem 5-5B (Concluded)
Part 4
Current assets
Cash ………………………………………………………………. $ 7,400
Merchandise inventory ……………………………………. 21,300
Net Sales…………………………………………………………… $221,100
5-8
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Problem 5-6BB (50 minutes)
FOSTER PRODUCTS COMPANY
Work Sheet
For Year Ended October 31, 2015
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Income
Statement Balance Sheet
Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash……………………………………. 7,400 7,400 7,400
Merchandise inventory………… 24,000 (d) 2,700 21,300 21,300
Store supplies……………………… 9,700 (a) 6,000 3,700 3,700
Prepaid insurance………………… 6,600 (b) 2,800 3,800 3,800
0
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