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Title: Problem 5-2B
QA_Ori:
3-Jul Merchandise Inventory
15,00
0
Accounts Payable—OLB 15,000
Purchased goods on credit, terms 1/10, n/30.
4-Jul Accounts Payable—OLB 150
Cash 150
Paid freight for OLB Corp.
Paid payable within discount period.
21-Jul Accounts Receivable—Brown 11,000
Sales 11,000
Sold goods on credit, terms 1/10, n/30.
21-Jul Cost of Goods Sold 7,000
Merchandise Inventory 7,000
To record cost of the July 21 sale.
Title: Problem 5-3B
QA_Ori:
Part 1
Adjustment (a)
31-Oct Store Supplies Expense 6,000
Adjustment (b)
31-Oct Insurance Expense 2,800
Adjustment (c)
Depreciation Expense—Store
To record depreciation expense.
Adjustment (d)
31-Oct Cost of Goods Sold 2,700
Part 2 Multiple-step income statement
FOSTER PRODUCTS COMPANY
Income Statement
For Year Ended October 31, 2013
Sales $227,100
Less: Sales discounts $1,000
Sales returns and allowances 5,000 6,000
** 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, 2013
Net sales $221,100
Expenses
Cost of goods sold
$78,50
0
Selling expenses 71,300*
* From part 2
Part 4
Current assets
Cash $7,400
Merchandise inventory 21,300
Title: Problem 5-4B
QA_Ori:
1. Net sales
Sales................................................................................. $332,650
2. Cost of merchandise purchased
3. Multiple-step income statement
BARKLEY COMPANY
Income Statement
For Year Ended March 31, 2013
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
Expenses
Selling expenses
4. Single-step income statement
BARKLEY COMPANY
Income Statement
For Year Ended March 31, 2013
Net sales $306,775
Expenses
Cost of goods sold $115,600
Title: Problem 5-5B
QA_Ori:
Part 1
Closing entries
31-Mar Sales
332,65
0
31-Mar Income Summary
277,47
5
Sales Discounts 5,875
Sales Returns and Allowances 20,000
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:
Maximum discount available (3% x $131,800) 3,954
This analysis suggests that about 25% of available discounts have been missed.
As a result, it would appear that cash is not being well managed. Management
Part 3
First, we compute this year’s sales returns and allowances rate:
332,65
This calculation shows that the company’s customers are returning or requiring
