Chapter 04 – Reporting and Analyzing Merchandising Operations
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 (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 (Continued)
Part 2 Multiple-step income statement
FOSTER PRODUCTS COMPANY
Income Statement
For Year Ended October 31, 2013
Store supplies expense ……………………………….. 6,000
Advertising expense ……………………………………. 17,800
Total selling expenses …………………………………. 71,300
General and administrative expenses
Insurance expense ………………………………………. 2,800
For Year Ended October 31, 2013
Net sales …………………………………………………………. $221,100
Expenses
Cost of goods sold ……………………………………… $78,500
Selling expenses ………………………………………… 71,300*
General and administrative expense ……………. 47,300*
Problem 4-4B (Continued)
3. Multiple-step income statement
BARKLEY COMPANY
Income Statement
For Year Ended March 31, 2013
Sales ………………………………………………………….. $332,650
Total selling expenses ……………………………. 90,350
General and administrative expenses
Office salaries expense …………………………... 40,750
Rent expense—Office space …………………… 3,800
Office supplies expense ………………………….. 1,100
Problem 4-5B (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)