PROBLEM SET B
Problem 4-1B (40 minutes)
May 2 Merchandise Inventory ………………………………. 10,000
Accounts Payable—Havel ……………………. 10,000
Purchased goods on credit, terms 1/15, n/30.
4 Accounts Receivable—Heather ………………….. 11,000
Sold goods for cash.
9 Cost of Goods Sold ……………………………………. 2,000
Merchandise Inventory ………………………… 2,000
To record cost of the May 9 sale.
10 Merchandise Inventory ………………………………. 3,650
Problem 4-1B (Concluded)
May 17 Accounts Payable—Havel …………………………. 10,000
Merchandise Inventory * ……………………… 100
Cash …………………………………………………… 9,900
Paid payable in discount period (*10,000 x 1%).
25 Accounts Payable—Duke ………………………….. 3,250
Merchandise Inventory * ……………………… 65
Cash …………………………………………………… 3,185
Paid payable in discount period
[($3,650 – $400)x 2%].
Problem 4-2B (40 minutes)
July 3 Merchandise Inventory ……………………………… 15,000
Accounts Payable—OLB …………………….. 15,000
Purchased goods on credit, terms 1/10, n/30.
7 Accounts Receivable—Brill ……………………….. 11,500
Problem 4-2B (Concluded)
July 17 Cash …………………………………………………………. 9,457
Sales Discounts* ………………………………………. 193
Accounts Receivable—Brill ………………… 9,650
Collected receivable within discount period.
21 Cost of Goods Sold …………………………………… 7,000
Merchandise Inventory ……………………….. 7,000
To record cost of the July 21 sale.
24 Sales Returns and Allowances ………………….. 1,300
Accounts Receivable—Brown …………….. 1,300
Problem 4-3B (40 minutes)
1.
Net sales
Sales ……………………………………………………….…………..…
$332,650
Less: Sales discounts ………………………………………….…
(5,875)
Sales returns and allowances ……………………..…
(20,000)
Net sales ……………………………………………………….…….…
$306,775
2.
Cost of merchandise purchased
Invoice cost of merchandise purchases ………………..…
$138,500
Purchase discounts received ……………………………….…
(2,950)
Purchase returns and allowances …………………………..
(6,700)
Costs of transportation–in …………………………………….…
5,750
Total cost of merchandise purchases …………………..…
$134,600
Problem 4-3B (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
Expenses
Problem 4-3B (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 4-4B (30 minutes)
Part 1
Closing entries
March 31 Sales ………………………………………………………… 332,650
Income Summary …………………………………… 332,650
To close temporary accounts with credit balances.
Problem 4-4B (Concluded)
Part 2
The first step is to determine the amount of purchases that were subject to
a discount during the year:
Invoice cost of merchandise purchases ……………………… $138,500
Purchase returns and allowances …………………………..….. (6,700)
Problem 4-5B (60 Minutes)
Part 1
Adjustment (a)
Oct. 31 Store Supplies Expense …………………………….. 6,000
Store Supplies …………………………………….. 6,000
Problem 4-5B (Continued)
Part 2 Multiple-step income statement
FOSTER PRODUCTS COMPANY
Income Statement
For Year Ended October 31, 2015
Store supplies expense ……………………………….. 6,000
Advertising expense ……………………………………. 17,800
Total selling expenses …………………………..…….. 71,300
* $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