Chapter 04 – Reporting and Analyzing Merchandising Operations
Exercise 4-2 (30 minutes)
Apr. 2 Merchandise Inventory ………………………………. 4,600
Accounts Payable—Lyon …………………….. 4,600
Purchased merchandise on credit.
3 Merchandise Inventory ………………………………. 300
Exercise 4-3 (30 minutes)
1. BUYER– Santa Fe Company
a) Credit Purchase
Merchandise Inventory ……………………………… 24,000
2. SELLER – Mesa Company
a) Credit Sale
Accounts Receivable ………………………………… 24,000
Sales ………………………………………………….. 24,000
3. Amount borrowed to pay with discount ………………….. $ 23,280
Annual rate of interest …………………………………………… x 8%
Interest per year …………………………………………………….. $1,862.40
Exercise 4-5 (15 minutes)
May 5 Merchandise Inventory ……………………………… 21,000
Accounts Payable ………………………………. 21,000
Purchased merchandise on credit (1,500 x $14).
a.
Exercise 4-7 (25 minutes)
1. Entries for Sydney Company (BUYER):
May 11 Merchandise Inventory ……………………………. 40,000
Accounts Payable ……………………………… 40,000
Purchased merchandise on credit.
2. Entries for Troy Corporation (SELLER):
May 11 Accounts Receivable ……………………………….. 40,000
Sales …………………………………………………. 40,000
Sold merchandise on account.
Exercise 4-9 (25 minutes)
Adjusting entries
Dec. 31 Sales Salaries Expense …………………………….. 1,700
Salaries Payable…………………………………. 1,700
To record accrued salaries.
To close temporary accounts with
credit balances.
Dec. 31 Income Summary …………………………………… 444,750
Sales Returns and Allowances …………. 17,500
Sales Discounts ………………………………. 5,000
Exercise 4-11 (20 minutes)
The employee’s oversight in omitting these goods from the physical count
would cause the cost of the physical count of ending inventory to be
understated. Therefore, the comparison of the perpetual inventory records
asset.
Exercise 4-12 (20 minutes)
See the solution explanation in Exercise 4-11. As a result of this error: