Part 4
Current assets
Cash…………………………………………………………………… $ 1,000
Merchandise inventory………………………………………….. 10,900
Title: Problem 5-4A
QA_Ori:
1. Net sales
Sales…………………………………………………………………….. $225,600
2. Cost of Merchandise purchased
Invoice cost of merchandise purchased……………………… $ 92,000
3. Multiple-step income statement
VALLEY COMPANY
Income Statement
For Year Ended August 31, 2013
Sales $225,600
Less: Sales discounts $2,250
Sales returns and allowances 12,000 14,250
Net sales 211,350
Cost of goods sold * 74,500
Gross profit 136,850
4. Single-step income statement
VALLEY COMPANY
Income Statement
For Year Ended August 31, 2013
Net sales $211,350
Expenses
$74,50
Title: Problem 5-5A
QA_Ori:
Part 1
Closing entries
31-Aug Sales 225,600
Income Summary 225,600
To close temporary accounts with credit
balances.
31-Aug Income Summary 175,750
Sales Discounts 2,250
Sales Returns and Allowances 12,000
31-Aug Income Summary 49,850
31-Aug K. Valley, Capital 8,000
Part 2
The first step is to determine the amount of purchases that are subject to a
discount during the year:
Invoice cost of merchandise purchases…………….. $92,000
This amount is used to determine the maximum discount, which is then
compared to the actual discount:
Purchase discounts missed……………………………… $ 625
As a percent of available discounts ($625/$2,625) 23.8%
This analysis suggests that nearly 24% of available discounts have been missed.
possibility.
Part 3
The first step is to compute this year’s sales returns and allowances rate:
Sales……………………………………………………………. $225,600
This calculation shows that the company’s customers are returning or requiring
Title: Problem 5-6AB
QA_Ori:
NELSON COMPANY
Work Sheet
For Year Ended January 31, 2013
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Income
Statement Balance Sheet
Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash…………………………..1,000 1,000 1,000
Merchandise inventory………12,500 (
d
)
1,600 10,900 10,900
Store supplies………………..5,800 (
a
)
4,050 1,750 1,750
allowances……………………
Cost of goods sold…………..38,400 (
d
)
1,600 40,000 40,000
QA_Edit:
Title: Problem 5-1B
QA_Ori:
2-May Merchandise Inventory
10,00
0
Accounts Payable—Havel
10,00
0
Purchased goods on credit, terms 1/15, n/30.
4-May Accounts Receivable—Heather 11,000
Sales 11,000
Sold goods on credit, terms 2/10, n/60.
Received credit memo from returning goods to supplier.
14-May Cash
10,78
0
Sales Discounts* 220
Accounts Receivable—Heather 11,000
Collected receivable within discount period.
*$11,000 x 2%
10,00
To record cost of the May 31 sale.
QA_Edit: