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P5B-46B Journalizing purchase and sale transactions—periodic inventory system
Learning Objective 8 Appendix 5B
Journalize the following transactions that occurred in June 2018 for Daley Company. Assume
Daley uses the periodic inventory system. No explanations are needed. Identify each accounts
payable and accounts receivable with the vendor or customer name. Daley estimates sales returns
at the end of each month.
Jun. 3 Purchased merchandise inventory on account from Sherry Wholesalers, $5,500. Terms 3/15,
n/EOM, FOB shipping point.
4 Paid freight bill of $42 on June 3 purchase.
4 Purchased merchandise inventory for cash of $1,100.
6 Returned $200 of inventory from June 3 purchase.
8 Sold merchandise inventory to Henrich Company, $4,400, on account. Terms 2/15, n/35.
9 Purchased merchandise inventory on account from Tex Wholesalers, $4,600. Terms 1/10, n/30,
FOB destination.
10 Made payment to Sherry Wholesalers for goods purchased on June 3, less return and discount.
12 Received payment from Henrich Company, less discount.
13 After negotiations, received a $300 allowance from Tex Wholesalers.
15 Sold merchandise inventory to Jarvis Company, $1,500, on account. Terms n/EOM.
22 Made payment, less allowance, to Tex Wholesalers for goods purchased on June 9.
23 Jarvis Company returned $100 of the merchandise sold on June 15.
25 Sold merchandise inventory to Smith for $700 on account. Terms of 3/10, n/30 was offered,
FOB shipping point.
29 Received payment from Smith, less discount.
30 Received payment from Jarvis Company, less return.
SOLUTION
P5B-47B Preparing a multi-step income statement and journalizing closing entries
Learning Objective 8 Appendix 5B
1. Gross Profit $212,800
Taylor Department Store uses a periodic inventory system. The adjusted trial balance of Taylor
Department Store at December 31, 2018, follows:
1. Prepare Taylor Department Store’s multi-step income statement for the year ended December
31, 2018. Assume ending Merchandise Inventory is $36,700.
2. Journalize Taylor Department Store’s closing entries.
SOLUTION
Requirement 1
Using Excel
P5-48 Using Excel to prepare a multi-step income statement
Cougar Mountain Sports has prepared an adjusted trial balance for the fiscal year ended June 30,
2018. Notes to the adjusted trial balance are located below the totals.
Use the blue shaded areas on the income statement worksheet for inputs.
Requirements:
1. Use Excel to prepare a multi-step income statement based on the adjusted trial balance.
a. Use formulas to link the balances on the adjusted trial balance to the amounts on the
income statement. Note that some balances are split between two different areas of the
Income Statement. For example, the Rent Expense is divided into two categories—
Selling and Administrative.
b. Use a formula to add and subtract account amounts as indicated.
c. Format the numbers in the dollar columns with a comma and no decimal places (e.g.
5,460). Use a dollar sign at the top of each column and at the total (e.g. $26,201). Make
sure the decimal places align.
d. Double-underline the total.
2. Compute the gross profit margin percentage. Format percentages to two decimal places (e.g.
22.74%).
Continuing Problem – Part 1
P5-49 Journalizing and posting purchase and sale transactions
This problem continues the Canyon Canoe Company situation from Chapter 4. At the beginning
of the new year, Canyon Canoe Company decided to carry and sell T-shirts with its logo printed
on them. Canyon Canoe Company uses the perpetual inventory system to account for the
inventory. During January 2019, Canyon Canoe Company completed the following
merchandising transactions:
Jan. 1 Purchased 10 T-shirts at $4 each and paid cash.
2 Sold 6 T-shirts for $10 each, total cost of $24. Received cash.
3 Purchased 50 T-shirts on account at $5 each. Terms 2/10, n/30.
7 Paid the supplier for the T-shirts purchased on January 3, less discount.
8 Realized 4 T-shirts from the January 1 order were printed wrong and returned them for a
cash refund.
10 Sold 40 T-shirts on account for $10 each, total cost of $200. Terms 3/15, n/45.
12 Received payment for the T-shirts sold on account on January 10, less discount.
14 Purchased 100 T-shirts on account at $4 each. Terms 4/15, n/30.
18 Canyon Company called the supplier from the January 14 purchase and told them that
some of the T-shirts were the wrong color. The supplier offered a $50 purchase allowance.
20 Paid the supplier for the T-shirts purchased on January 14, less the allowance and discount.
21 Sold 60 T-shirts on account for $10 each, total cost of $220. Terms 2/20, n/30.
23 Received a payment on account for the T-shirts sold on January 21, less discount.
25 Purchased 320 T-shirts on account at $5 each. Terms 2/10, n/30, FOB shipping point.
27 Paid freight associated with the January 25 purchase, $48.
29 Paid for the January 25 purchase, less discount.
30 Sold 275 T-shirts on account for $10 each, total cost of $1,300. Terms 2/10, n/30.
31 Received payment for the T-shirts sold on January 30, less discount.
Requirements
1. Open the following T-accounts in the ledger, using the post-closing balances from Chapter 4:
Cash, Accounts Receivable, Merchandise Inventory, Estimated Returns Inventory, Office
Supplies, Prepaid Rent, Land, Building, Accumulated Depreciation––Building, Canoes,
Accumulated Depreciation––Canoes, Accounts Payable, Utilities Payable, Telephone
Payable, Wages Payable, Refunds Payable, Interest Payable, Unearned Revenue, Notes
Payable, Common Stock, Retained Earnings, Income Summary, Sales Revenue, Canoe
Rental Revenue, Cost of Goods Sold, Rent Expense, Wages Expense, Utilities Expense,
Telephone Expense, Supplies Expense, Depreciation Expense––Building, Depreciation
Expense––Canoes, Interest Expense.
2. Journalize and post the transactions. Compute each account balance, and denote the balance
as Balance. Omit explanations.
SOLUTION
Requirement 2
P5-49, cont.
Requirements 1 and 2
P5-49, cont.
Requirements 1 and 2, cont.
P5-49, cont.
Requirements 1 and 2, cont.
