30 Minutes, Strong
a. $ 525,000
PROBLEM 6.7
A
THOMPSON PLUMBING
Sales ($150,000 + $375,000)
a.
40 Minutes, Strong PROBLEM 6.8
A
CPI
Parts a, f, and g follow; parts b, c, d, and e are on the next page.
The operating cycle of a merchandising company consists of purchasing merchandise,
selling that merchandise to customers (often on account), and collecting the sales proceeds
Jan 2 24,250
Accounts Pa
y
able
(
Shar
p)
24,250
y
(
p)
Sale on account; terms, 5/10, n/90.
PROBLEM 6.8
A
b.
2016
General Journal
CPI (concluded)
n/60. Net cost, $25,000, less 3%.
Inventory
Purchased merchandise on account; terms, 3/10,
To record the cost of merchandise sold to Pace
Corporation.
35 Minutes, Medium
A
p
r 15 19,700
Sales 19,700
SOLUTIONS TO PROBLEMS SET B
Accounts Receivable
Sold merchandise on account.
To record the cost of goods sold relating to the
PROBLEM 6.1B
a.
BIG OAK LUMBE
R
General Journal
sales of merchandise to Hard Hat Construction.
c.
PROBLEM 6.1B
BIG OAK LUMBER (concluded)
Big Oak seems quite able to pass its extra transportation costs on to its customers and, in
(1) $1,000,000 sales 22% = $220,000
(2) $698,500 gross profit $1,422,000 net sales = 49.1%
Big Oak earned a gross profit rate of 49.1%, which is significantly higher than the industry
average. Big Oak’s sales were a little greater than the industry average, but it earned
$478,500 more gross profit than the “average” store of its size. This higher gross profit was
a.
PROBLEM 6.2B
HARRY’S HABERDASHER
Y
HARRY’S HABERDASHERY
For the Year Ended December 31, 2015
Income Statement
15 Minutes, Easy
Cost of goods sold
20 Minutes, Medium
2015-2016 2014-2015
a. 1. 3.8% (1) 7.5% (2)
2. Change in net sales per square foot………
…
(1.4%) (3) (3.8%) (4)
3. Change in comparable store sales………… (1.5%) (5) (1.7%) (6)
b. While Pete’s has increased its overall revenue from sales, several of the statistics indicate
PETE’S AUTO PARTS
PROBLEM 6.3B
Change in net sales…………………………
30 Minutes Medium
(1)
11 686
Inventor
y
686
y
PROBLEM 6.4B
a.
General Journal
MARY’S TV
Date
Made payment after discount period had expired.
Sold 2 Whosa TVs for cash.
Cost of Goods Sold
To record cost of TVs sold.
c.
PROBLEM 6.4B
MARY’S TV (concluded)
The net cost method provides more useful information for evaluating the company’s
30 Minutes Medium
a.
Oct. 12 18,000
Sales 18,000
b.
$59.40 per pair x 4 pairs = $237.60).
Returned 4 pairs of pants to supplier. (Net cost,
PROBLEM 6.5B
Journal entries by Hip Pants:
General Journal
HIP PANTS AND SLEEK
Accounts Receivable (Sleek)
Sold merchandise on account; terms, 1/10, n/30.
($17,760 x 1% = $177.60).
Journal entries by Sleek:
Collected amount due, less return and less 1%
cash discount on remaining $17,760 balance