Chapter 04 – Reporting and Analyzing Merchandising Operations
Problem 4-2A (Concluded)
Aug. 15 Cash ………………………………………………………….. 4,508
Sales Discounts* ……………………………………….. 92
Accounts Receivable—Laird ……………….. 4,600
Collected receivable within 2% discount period.
Merchandise Inventory ………………………… 2,400
To record cost of the August 19 sale.
22 Sales Returns and Allowances …………………… 500
Accounts Receivable—Tux ………………….. 500
Issued credit memorandum.
Problem 4-3A (60 minutes)
Part 1 Adjustment (a)
Jan 31 Store Supplies Expense …………………………….. 4,050
Store Supplies …………………………………….. 4,050
To record store supplies expense
Problem 4-3A (Concluded)
Part 3 Single–step income statement
NELSON COMPANY
Income Statement
For Year Ended January 31, 2013
Problem 4-4A (Continued)
3. Multiple-step income statement
VALLEY COMPANY
Income Statement
For Year Ended August 31, 2013
Sales …………………………..……………………………… $225,600
Total selling expenses ……………………………. 54,500
General and administrative expenses
Office salaries expense …………………………... 28,500
Rent expense—Office space …………………… 3,600
Office supplies expense ………………………….. 400
Problem 4-5A (30 minutes)
Part 1
Closing entries
Aug. 31 Sales ……………………………………………………. 225,600
Income Summary ……………………………. 225,600
To close temporary accounts with
Problem 4-6AB (50 minutes)
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
Prepaid insurance ………………………..…
2,400
(b)
1,400
1,000
1,000
Store equipment …………………………………
42,900
42,900
42,900
Accum. depreciation—Store eq ………….
15,250
(c)
1,525
16,775
16,775
Accounts payable ………………………..…
10,000
10,000
10,000
Common stock ……………………………..……
5,000
5,000
5,000
Retained earnings ………………………..…
27,000
27,000
27,000
Dividends………………………………………..……
2,200
2,200
2,200
Sales …………………………..…………………………
111,950
111,950
111,950
Sales discounts …………………………….……
2,000
2,000
2,000
Sales returns and allowances …………
2,200
2,200
2,200
Cost of goods sold ……………………….….
38,400
(d)
1,600
40,000
40,000
Depreciation expense—Store eq ……….
0
(c)
1,525
1,525
1,525
Salaries expense …………………………..……
35,000
35,000
35,000
Insurance expense ……………………….….
0
(b)
1,400
1,400
1,400
Rent expense …………………………..…….……
15,000
15,000
15,000
Store supplies expense ……………………
0
(a)
4,050
4,050
4,050
Advertising expense …………………………
9,800
______
____
____
9,800
______
9,800
______
______
______
Totals …………………………..…………………..……
169,200
169,200
8,575
8,575
170,725
170,725
110,975
111,950
59,750
58,775
Net income ……………………………………..……
975
______
______
975
Totals …………………………..…………………..……
111,950
111,950
59,750
59,750