Chapter 04 – Reporting and Analyzing Merchandising Operations
Problem 4-6BB (50 minutes)
FOSTER PRODUCTS COMPANY
Work Sheet
For Year Ended October 31, 2013
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Account Title
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash ………………………………………………………
7,400
7,400
7,400
Merchandise inventory ……………….……
24,000
(d)
2,700
21,300
21,300
Store supplies ………………………………..……
9,700
(a)
6,000
3,700
3,700
Prepaid insurance ………………………..…
6,600
(b)
2,800
3,800
3,800
Store equipment …………………………………
81,800
81,800
81,800
Accum. depreciation—Store eq ………….
32,000
(c)
3,000
35,000
35,000
Accounts payable ………………………..…
18,000
18,000
18,000
Common stock ……………………………..……
3,000
3,000
3,000
Retained earnings ………………………..…
40,000
40,000
40,000
Dividends…………………………..…………………
2,000
2,000
2,000
Sales ………………………………………………..……
227,100
227,100
227,100
Sales discounts …………………………….……
1,000
1,000
1,000
Sales returns and allowances …………
5,000
5,000
5,000
Cost of goods sold ……………………….….
75,800
(d)
2,700
78,500
78,500
Depreciation expense—Store eq ……….
0
(c)
3,000
3,000
3,000
Salaries expense …………………………..……
63,000
63,000
63,000
Insurance expense ……………………….….
0
(b)
2,800
2,800
2,800
Rent expense ………………………………………
26,000
26,000
26,000
Store supplies expense ……………………
0
(a)
6,000
6,000
6,000
Advertising expense …………………………
17,800
______
_____
_____
17,800
______
17,800
______
______
______
Totals ……………………………………………….……
320,100
320,100
14,500
14,500
323,100
323,100
203,100
227,100
120,000
96,000
Net income ……………………………………..……
24,000
______
______
24,000
Totals ……………………………………………….……
227,100
227,100
120,000
120,000
Chapter 04 – Reporting and Analyzing Merchandising Operations
SERIAL PROBLEM — SP 4
Serial Problem — SP 4, Success Systems (150 minutes) Part 1
Journal entries
Jan. 4 Wages Expense ……………………………………….623 125
Accounts Receivable—Gomez Co. …….106.6 2,668
Collected accounts receivable.
11 Accounts Receivable—Alex’s Eng. Co …………106.1 5,500
Unearned Computer Services Revenue ……….236 1,500
Computer Services Revenue ……………..403 7,000
16 Cash ………………………………………………………..101 4,000
Computer Services Revenue ……………..403 4,000
Collected cash revenue from customer.
Chapter 04 – Reporting and Analyzing Merchandising Operations
Serial Problem — SP 4 (Continued)
the following entry would have been recorded:
Loss from Defective Merchandise …… 808 320
Cost of Goods Sold ……………………. 502 320
22 Cash ………………………………………………………..101 4,653
Sales Discounts ……………………………………….415 47
26 Merchandise Inventory …………………………….119 9,000
Accounts Payable ……………………………..201 9,000
Purchased merchandise for resale.
26 Accounts Receivable—KC, Inc ………………….106.8 5,800
Sales …………………………………………………413 5,800
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Cash …………………………………………………101 2,475
Paid three months’ rent in advance.
3 Accounts Payable ……………………………………201 8,504
Merchandise Inventory ………………………119 90
Cash …………………………………………………101 8,414
Accounts Receivable—Alex’s Eng. Co. ……106.1 5,500
Collected accounts receivable.
15 Dividends …………………………………………………319 4,800
Cash …………………………………………………101 4,800
Paid cash dividends.
Cash …………………………………………………101 192
Reimbursed Lopez for business mileage.
Chapter 04 – Reporting and Analyzing Merchandising Operations
Serial Problem — SP 4 (Continued)
Mar. 8 Computer Supplies ………………………………….126 2,730
Collected cash revenue from customer.
19 Accounts Payable ……………………………………201 3,830
Cash …………………………………………………101 3,830
Paid accounts payable ($1,100 + $2,730).
24 Accounts Receivable—Easy Leasing ………..106.3 8,900
Sold merchandise on credit.
30 Cost of Goods Sold ………………………………….502 1,100
Merchandise Inventory ………………………119 1,100
To record cost of March 30 sale.
31 Mileage Expense ……………………………………..676 128
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15 600 84,603
16 4,000 88,603
17 5,742 82,861
22 4,653 87,514
31 1,250 86,264
19 3,830 77,973
31 128 77,845
Accounts Receivable—Alex’s Engineering Co. Acct. No. 106.1
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
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Dec. 31 Balance 0
Mar. 24 8,900 8,900
Accounts Receivable—IFM Co. Acct. No. 106.4
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 3,000
Jan. 9 2,668 0
Accounts Receivable—Delta Co. Acct. No. 106.7
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
Feb. 23 3,220 3,220
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Merchandise Inventory Acct. No. 119
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
Jan. 7 5,800 5,800
13 3,560 2,240
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 580
Mar. 8 2,730 3,310
Prepaid Insurance Acct. No. 128
Date Explanation PR Debit Credit Balance
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Accumulated Depreciation—Office Equipment Acct. No. 164
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 400
Computer Equipment Acct. No. 167
Date Explanation PR Debit Credit Balance
26 9,000 9,604
Feb. 3 8,504 1,100
Mar. 8 2,730 3,830
19 3,830 0
Wages Payable Acct. No. 210
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Date Explanation PR Debit Credit Balance
Dec. 31 Balance 83,000
Jan. 5 25,000 108,000
Retained Earnings Acct. No. 318
Date Explanation PR Debit Credit Balance
Sales Acct. No. 413
Date Explanation PR Debit Credit Balance
Jan. 13 5,200 5,200
26 5,800 11,000
Feb. 23 3,220 14,220