Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
4-77
Bal.
-0-
4-78
PROBLEM 4-26A (Cont.)
d.
Redd Company
Financial Statements
For the Year Ended December 31, 2016
Income Statement
Net Sales
$10,178
Cost of Goods Sold
(6,542)
Gross Margin
3,636
Operating Expenses
Transportation-out
(140)
Operating Income
3,496
Nonoperating Items
Interest Revenue
600
Gain on Sale of Land
1,500
Net Income
5,596
Statement of Changes in Stockholders’ Equity
Beginning Common Stock
$15,000
Plus: Stock Issued
-0-
Ending Common Stock
$15,000
Beginning Retained Earnings
$13,900
Plus: Net Income
5,596
Ending Retained Earnings
19,496
Total Stockholders’ Equity
$34,496
4-79
PROBLEM 4-26A d. (cont.)
Redd Company
Financial Statements
Balance Sheet
As of December 31, 2016
Assets
Cash
$20,496
Merchandise Inventory
13,400
Interest Receivable
600
Total Assets
$34,496
Liabilities
$ -0-
Stockholders’ Equity
Common Stock
15,000
Retained Earnings
19,496
Total Stockholders’ Equity
34,496
Total Liabilities and Stockholders’ Equity
$34,496
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash Flows From Operating Activities:
Cash Inflow from Customers*
$10,178
Cash Outflow for Inventory**
(4,942)
Cash Outflow for Expenses
(140)
Net Cash Flow from Operating Activities
$5,096
Cash Flows From Investing Activities
Cash Inflow from Sale of Land
8,500
Cash Flows From Financing Activities
-0-
Net Change in Cash
13,596
Plus: Beginning Cash Balance
6,900
Ending Cash Balance
$20,496
*(7b)11,858 – (5a) $1,680 = $10,178
4-80
PROBLEM 4-26A (cont.)
e.
Date
Account Titles
Debit
Credit
Closing Entries, December 31, 2016
Dec. 31
Sales Revenue
10,178
Retained Earnings
10,178
Dec. 31
Retained Earnings
6,682
Cost of Goods Sold
6,542
Transportation-out
140
Dec. 31
Interest Revenue
600
Gain from Sale of Land
1,500
Retained Earnings
2,100
4-82
PROBLEM 4-27A
a. & b.
Toner Sales Company
Income Statement
For the Years Ended December 31, 2016 and 2017
2016
2017
Net Sales
$200,000
100%
$200,000
100%
Cost of Goods Sold
(90,000)
45
(80,000)
40
Gross Margin
110,000
55
120,000
60
Operating Expenses
(60,000)
30
(50,000)
25
Operating Income
50,000
25
70,000
35
Loss on Sale of Land
-0-
(24,000)
12
Net Income
$50,000
25%
$46,000
23%
4-83
PROBLEM 4-28A (Appendix)
a.
King Co.
Schedule of Cost of Goods Sold
For the Year Ended December 31, 2016
Beginning Merchandise Inventory
$ 11,200
Purchases
88,000
Purchase Returns and Allowances
(2,100)
Transportation-in
3,800
Cost of Goods Available for Sale
100,900
Less: Ending Merchandise Inventory
(10,700)
Cost of Goods Sold
$ 90,200
4-84
PROBLEM 4-28A (cont.) (Appendix)
b. Multistep income statement
King Co.
Income Statement
For the Year Ended December 31, 2016
Sales
Sales Revenue
$156,300
Sales Returns and Allowances
(3,500)
Net Sales
$152,800
Cost of Goods Sold
(90,200)
Gross Margin
62,600
Operating Expenses
Miscellaneous Expense
900
Transportation-out
2,200
Advertising Expense
6,200
Salaries Expense
21,000
Rent Expense
12,000
Utilities Expense
1,850
Total Operating Expenses
(44,150)
Operating Income
18,450
Non-Operating Items
Interest Expense
(250)
Loss on Sale of Land
(3,100)
Net Income
$ 15,100
4-85
PROBLEM 4-28A (cont.) (Appendix)
c. Single-step income statement
King Co.
Income Statement
For the Year Ended December 31, 2016
Sales
Sales Revenue
$156,300
Sales Returns and Allowances
(3,500)
Net Sales
$152,800
Operating Expenses
Cost of Goods Sold
90,200
Miscellaneous Expense
900
Transportation-out
2,200
Advertising Expense
6,200
Salaries Expense
21,000
Rent Expense
12,000
Utilities Expense
1,850
Total Expenses
(134,350)
Nonoperating Items
Interest Expense
250
Loss on Sale of Land
3,100
(3,350)
Net Income
$ 15,100
4-86
PROBLEM 4-29A (Appendix)
a.
Benji’s Grocery
General Journal, 2016
Event
Account Titles
Debit
Credit
1.
Land
30,000
Cash
30,000
2.
Purchases
230,000
Accounts Payable
230,000
3.
Transportation-in
2,100
Cash
2,100
4.
Accounts Payable
8,600
Purchase Returns and Allow.
8,600
5.
Cash
186,000
Sales Revenue
186,000
6.
Accounts Receivable
236,000
Sales Revenue
236,000
7a.
Accounts Payable [($230,000 – $8,600) x .01]
2,214
Purchase Discounts
2,214
7b.
Accounts Payable ($230,000 – $8,600 – $2,214)
219,186
Cash
219,186
8.
Selling Expenses
28,500
Cash
28,500
9a.
Sales Discounts ($156,000 x 2%)
3,120
Accounts Receivable
3,120
9b.
Cash ($156,000 − $3,120)
152,880
Accounts Receivable
152,880
4-87
PROBLEM 4-29A a. (cont.)
Benji’s Grocery
General Journal, 2016
Event
Account Titles
Debit
Credit
10.
Cash
56,000
Accounts Receivable
56,000
11.
Operating Expense
17,100
Cash
17,100
12.
Cost of Goods Sold1
262,986
Merchandise Inventory (Ending)
48,300
Purchase Discounts
2,214
Purchase Returns and Allowances
8,600
Purchases
230,000
Transportation-in
2,100
Merchandise Inventory (Beginning)
90,000
4-88
PROBLEM 4-29A (cont.) b.
Benji’s Grocery
Cash
Accounts Payable
Common Stock
Bal.
64,000
1.
30,000
4.
8,600
Bal.
7,500
Bal.
89,000
5.
186,000
3.
2,100
7a.
2,214
2.
230,000
9b.
152,880
7b.
219,186
7b.
219,186
Retained Earnings
10.
56,000
8.
28,500
Bal.
7,500
Bal.
69,500
11.
17,100
Bal.
161,994
Sales Revenue
5.
186,000
6.
236,000
Bal.
422,000
Accounts Receivable
Bal.
12,000
9a.
3120
Sales Discounts
6.
236,000
9b.
152,880
9a.
3,120
10.
56,000
Bal.
36,000
Purchases
Merchandise Inventory
2.
230,000
12.
230,000
Bal.
90,000
12.
90,000
Bal.
-0-
12.
48,300
Bal.
48,300
Purchase Returns & Allow.
12.
8,600
4.
8,600
Land
Bal.
-0-
1.
30,000
Bal.
30,000
Purchase Discounts
12.
2,214
7a.
2,214
Bal.
-0-
Transportation-in
3.
2,100
12.
2,100
Bal.
-0-
Cost of Goods Sold
12.
262,986
Other Operating Expense
11.
17,100
Selling Expenses
8.
28,500
4-141
PROBLEM 4-29A (cont.)
c.
Benji’s Grocery
Schedule of Cost of Goods Sold
Beginning Inventory 1/1/2016
$ 90,000
Purchases
230,000
Purchase Discounts
(2,214)
Purchase Returns and Allow.
(8,600)
Transportation-in
2,100
Cost of Goods Available for Sale
$311,286
Ending Merchandise Inventory
(48,300)
Cost of Goods Sold
$262,986
4-142
PROBLEM 4-29A c. (cont.)
Benji’s Grocery
Financial Statements
For the Year Ended December 31, 2016
Income Statement
Revenue
Sales Revenue
$422,000
Sales Discounts
(3,120)
Net Sales
$418,880
Cost of Goods Sold
(262,986)
Gross Margin
155,894
Operating Expenses
Selling Expenses
$ 28,500
Other Operating Expense
17,100
Total Operating Expense
(45,600)
Net Income
$110,294
Statement of Changes in Stockholders’ Equity
Beginning Common Stock
$ 89,000
Plus: Stock Issued
-0-
Ending Common Stock
$ 89,000
Beginning Retained Earnings
$ 69,500
Plus: Net Income
110,294
Ending Retained Earnings
179,794
Total Stockholders’ Equity
$268,794
4-143
PROBLEM 4-29A c. (cont.)
Benji’s Grocery
Balance Sheet
As of December 31, 2016
Assets
Cash
$161,994
Accounts Receivable
36,000
Merchandise Inventory
48,300
Land
30,000
Total Assets
$276,294
Liabilities
Accounts Payable
$ 7,500
Total Liabilities
$ 7,500
Stockholders’ Equity
Common Stock
89,000
Retained Earnings
179,794
Total Stockholders’ Equity
268,794
Total Liab. and Stockholders’ Equity
$276,294
4-144
PROBLEM 4-29A c. (cont.)
Benji’s Grocery
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash Flows From Operating Activities:
Cash Inflow from Customers1
$394,880
Cash Outflow for Inventory2
(221,286)
Cash Outflow for Expenses3
(45,600)
Net Cash Flow from Operating Activities
$127,994
Cash Flows From Investing Activities:
Cash Outflow from sale of Land
(30,000)
Net Cash Flow from Investing Activities
(30,000)
Cash Flows From Financing Activities:
Net Cash Flow from Financing Activities
-0-
Net Change in Cash
97,994
Plus: Beginning Cash Balance
64,000
Ending Cash Balance
$161,994
1(5) $186,000 + (9b) $152,880 + (10) $56,000 = $394,880
2(3) $2,100 + (7b) $219,186 = $221,286
3(8) $28,500 +(11) $17,100 = $45,600
