4-135
4-136
EXERCISE 4-22B (cont.)
d.
Sally’s Gift Shop
General Journal
Account Titles
Debit
Credit
Closing Entries
Sales Revenue
98,300
Retained Earnings
98,300
Retained Earnings
59,900
Cost of Goods Sold
43,400
Advertising Expense
4,500
Salaries Expense
12,000
4-137
EXERCISE 4-22B d. (cont.)
Sally’s Gift Shop
T-Accounts
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Accounts Payable
Common Stock
Bal. 94,800
Bal. 9,200
Bal. 63,200
Retained Earnings
Merchandise Inventory
cl 59,900
cl 98,300
Bal. 16,000
Bal. 38,400
Sales Revenue
Bal. 98,300
cl 98,300
Bal. -0-
Cost of Goods Sold
Bal. 43,400
cl 43,400
Bal. -0-
Advertising Expense
Bal. 4,500
cl 4,500
Bal. -0-
Salaries Expense
Bal. 12,000
cl 12,000
Bal. -0-
4-138
EXERCISE 4-22B (cont.)
e.
Sally’s Gift Shop
Post-Closing Trial Balance
As of December 31, 2016
Account Titles
Debit
Credit
Cash
$ 94,800
Merchandise Inventory
16,000
Accounts Payable
$ 9,200
Common Stock
63,200
Retained Earnings
38,400
Totals
$110,800
$110,800
flows.
4-139
PROBLEM 4-23B
T-accounts are provided for the instructor’s use:
Mano Company
T-Accounts 2016, 2017, and 2018
Assets
=
Stockholders’ Equity
Cash
Common Stock
Retained Earnings
2016 40,000
30,000
2016 40,000
cl 28,500
2016 cl 42,000
42,000
6,500
Bal. 13,500
Bal. 45,500
cl 48,100
2017 cl 56,000
2017 56,000
36,000
Bal. 21,400
9,100
cl 62,200
2018 cl 72,000
Bal. 56,400
Bal. 31,200
2018 72,000
57,000
11,200
Sales Revenue
Bal. 60,200
cl 42,000
2016 42,000
Bal. -0-
Merchandise Inv.
cl 56,000
2017 56,000
2016 30,000
22,000
Bal. -0-
Bal. 8,000
cl 72,000
2018 72,000
2017 36,000
39,000
Bal. -0-
Bal. 5,000
2018 57,000
51,000
Bal. 11,000
Cost of Goods Sold
2016 22,000
Cl 22,000
Bal. -0-
2017 39,000
cl 39,000
Bal. -0-
2018 51,000
cl 51,000
Bal. -0-
Selling and Adm. Exp.
2016 6,500
cl 6,500
Bal. -0-
2017 9,100
cl 9,100
Bal. -0-
2018 11,200
cl 11,200
Bal. -0-
4-140
4-141
PROBLEM 4-23B (cont.)
Mano Company
Financial Statements
Income Statements
2016
2017
2018
Net Sales
$42,000
$56,000
$72,000
Cost of Goods Sold
(22,000)
(39,000)
(51,000)
Gross Margin
20,000
17,000
21,000
Operating Expenses
Selling and Admin. Expense
(6,500)
(9,100)
(11,200)
Net Income
$13,500
$ 7,900
$ 9,800
Balance Sheets
Assets
Cash
$45,500
$56,400
$60,200
Merchandise Inventory
8,000
5,000
11,000
Total Assets
$53,500
$61,400
$71,200
Liabilities
$ -0-
$ -0-
$ -0-
Stockholders’ Equity
Common Stock
$40,000
$40,000
$40,000
Retained Earnings
13,500
21,400
31,200
Total Stockholders’ Equity
53,500
61,400
71,200
Total Liab. and Stkholders’ Equity
$53,500
$61,400
$71,200
4-142
PROBLEM 4-24B
Event
Freight Costs Paid
Period/Product
a.
$500
Product
b.
$-0-
NA
c.
$ -0-
NA
d.
$300
Period
4-143
PROBLEM 4-25B
Event
Product Costs
Period Costs
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
4-144
PROBLEM 4-26B
a.
EuRo Enterprises
Effect of Events on the Financial Statements for 2016
Event
Event
Balance Sheet
Income Statement
Statement of
No.
Type
Assets
=
Liab.
+
S. Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
1a. Pur.
AS
+
+
NA
NA
NA
NA
NA
1b. Frt.
AE
+−
NA
NA
NA
NA
NA
− OA
2. Ret.
AU
−
−
NA
NA
NA
NA
NA
3a. Disc.
AU
−
−
NA
NA
NA
NA
NA
3b. Pay.
AU
−
−
NA
NA
NA
NA
− OA
4a. Sale
AS
+
NA
+
+
NA
+
NA
4b. Cost
AU
−
NA
−
NA
+
−
NA
5a. Ret.
AU
−
NA
−
−
NA
−
− OA
5b. Ret.
AS
+
NA
+
NA
−
+
NA
6. Frt.
AU
−
NA
−
NA
+
−
− OA
7a. Disc.
AU
−
NA
−
−
NA
−
NA
7b. Coll.
AE
+−
NA
NA
NA
NA
NA
+ OA
8. Land
AE
+−
NA
+
+
NA
+
+ IA
9. Rev.
AS
+
NA
+
+
NA
+
+ OA
10. Adj.
AU
−
NA
−
NA
+
−
NA
4-145
PROBLEM 4-26B (cont.) b.
EuRo Enterprises General Journal –2016
Account Titles
Debit
Credit
Merchandise Inventory
11,200
Accounts Payable
11,200
Merchandise Inventory
800
Cash
800
Accounts Payable
600
Merchandise Inventory
600
Accounts Payable [($11,200 – $600) x .02]
212
Merchandise Inventory
212
Accounts Payable ($11,200 – $600 – $212)
10,388
Cash
10,388
Accounts Receivable
13,500
Sales Revenue
13,500
Cost of Goods Sold
8,000
Merchandise Inventory
8,000
Sales Revenue
2,100
Cash
2,100
Merchandise Inventory
1,200
Cost of Goods Sold
1,200
Transportation-out
800
Cash
800
Sales Revenue
270
Accounts Receivable ($13,500 x .02)
270
Cash
13,230
Accounts Receivable ($13,500 – $270)
13,230
4-146
PROBLEM 4-26B (cont.) b.
EuRo Enterprises General Journal –2016
Account Titles
Debit
Credit
Cash
3,500
Land
2,000
Gain on Sale of Land
1,500
Interest Receivable
500
Interest Revenue
500
Cost of Goods Sold (Inventory Loss)1
1,888
Merchandise Inventory
1,888
4-147
PROBLEM 4-26B (cont.)
c.
EuRo Enterprises
T-Accounts for 2016
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Accounts Payable
Common Stock
Bal.
16,800
1b.
800
2.
600
1a.
11,200
Bal.
12,000
7b.
13,230
3b.
10,388
3a.
212
8.
3,500
5a.
2,100
3b.
10,388
6.
800
Bal.
-0-
Retained Earnings
Bal.
19,442
Bal.
10,800
cl
9,488
cl
13,130
Bal.
14,442
Merchandise Inventory
Bal.
4,000
Sales Revenue
1a.
11,200
2.
600
5a.
2,100
4a.
13,500
1b.
800
3a.
212
7a.
270
5b.
1,200
4b.
8,000
Bal.
11,130
Bal.
8,388
cl
11,130
10.
1,888
Bal.
-0-
Bal.
6,500
Cost of Goods Sold
4b.
8,000
Accounts Receivable
10.
1,888
5b.
1,200
4a.
13,500
7a.
270
Bal.
8,688
7b.
13,230
cl
8,688
Bal.
-0-
Bal.
-0-
Interest Receivable
Transportation-out
9.
500
6.
800
Bal.
500
Bal.
800
cl
800
Land
Bal.
-0-
Bal.
2,000
8.
2,000
Bal.
-0-
Interest Revenue
cl.
500
9.
500
Bal.
-0-
Gain on Sale of Land
cl.
1,500
8.
1,500
Bal.
-0-
4-148
4-149
PROBLEM 4-26B
d.
EuRo Enterprises
Financial Statements
For the Year Ended December 31, 2016
Income Statement
Net Sales
$11,130
Cost of Goods Sold
(8,688)
Gross Margin
2,442
Operating Expenses
Transportation-out
(800)
Operating Income
1,642
Nonoperating Items
Interest Revenue
500
Gain on Sale of Land
1,500
Net Income
$ 3,642
Statement of Changes in Stockholders’ Equity
Beginning Common Stock
$12,000
Plus: Stock Issued
-0-
Ending Common Stock
$12,000
Beginning Retained Earnings
$10,800
Plus: Net Income
3,642
Ending Retained Earnings
14,442
Total Stockholders’ Equity
$26,442
4-150
PROBLEM 4-26B d. (cont.)
EuRo Enterprises
Financial Statements
Balance Sheet
As of December 31, 2016
Assets
Cash
$19,442
Merchandise Inventory
6,500
Interest Receivable
500
Total Assets
$26,442
Liabilities
$ -0-
Stockholders’ Equity
Common Stock
$12,000
Retained Earnings
14,442
Total Stockholders’ Equity
26,442
Total Liabilities and Stockholders’ Equity
$26,442
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash Flows From Operating Activities:
Inflow from Customers*
$11,130
Outflow for Inventory**
(11,188)
Outflow for Expenses
(800)
Net Cash Flow from Operating Activities
$( 858)
Cash Flows From Investing Activities
-0-
Inflow from Sale of Land
3,500
Cash Flows From Financing Activities
-0-
Net Change in Cash
2,642
Plus: Beginning Cash Balance
16,800
Ending Cash Balance
$19,442
4-151
*(7b) $13,230 – (5a) $2,100 = $11,130
PROBLEM 4-26B (cont.)
e.
Account Titles
Debit
Credit
Closing Entries, December 31, 2016
Sales Revenue
11,130
Gain on Sale of Land
1,500
Interest Revenue
500
Retained Earnings
13,130
Retained Earnings
9,488
Cost of Goods Sold
8,688
Transportation-out
800
Debit
Credit
Cash
Merchandise Inventory
Interest Receivable
Common Stock
$12,000
Retained Earnings
Totals
$26,442
$26,442
4-153
PROBLEM 4-27B
a. & b.
Moore Sales Company
Income Statement
For the Years Ended December 31, 2016 and 2017
2016
2017
Net Sales
$60,000
100%
$70,000
100%
Cost of Goods Sold
(25,000)
42
(26,500)
38
Gross Margin
35,000
58
43,500
62
Operating Expenses
(13,200)
22
(16,100)
23
Operating Income
21,800
36
27,400
39
Gain on Sale of Land
-0-
5,000
7
Net Income
$21,800
36%
$32,400
46%
4-154
PROBLEM 4-28B (Appendix)
a.
Hogan Sales Co.
Schedule of Cost of Goods Sold
For Year Ended December 31, 2016
Beginning Merchandise Inventory
$ 36,000
Purchases
300,000
Purchase Returns and Allowances
(5,400)
Transportation-in
12,400
Cost of Goods Available for Sale
343,000
Less: Ending Merchandise Inventory
(40,200)
Cost of Goods Sold
$302,800