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*PROBLEM 5-5A (Continued)
VALDEZ FASHION CENTER
Balance Sheet (Continued)
November 30, 2015
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable (due next year) ................................. $20,000
Accounts payable ..................................................... 48,500
(c) Nov. 30 Supplies Expense..................................... 4,200
30 Depreciation Expense .............................. 11,500
Accumulated Depreciation—
30 Interest Expense ...................................... 4,000
30 Cost of Goods Sold .................................. 300
*PROBLEM 5-5A (Continued)
(d) Nov. 30 Sales Revenue ...................................... 755,200
30 Income Summary ................................. 757,400
Sales Returns and
Allowances ................................ 8,800
Cost of Goods Sold ...................... 497,700
30 Retained Earnings ................................ 2,200
30 Retained Earnings ................................ 12,000
*PROBLEM 5-5A (Continued)
(e) VALDEZ FASHION CENTER
Post-Closing Trial Balance
November 30, 2015
Debit
Credit
Cash ................................................................
Accounts Receivable ......................................
Inventory .........................................................
Supplies ..........................................................
Equipment .......................................................
Accumulated Depreciation—Equipment .......
Notes Payable .................................................
Accounts Payable ...........................................
Interest Payable ..............................................
Common Stock ...............................................
Retained Earnings ..........................................
$ 8,700
30,700
44,400
2,000
133,000
$218,800
$ 39,500
51,000
48,500
4,000
50,000
25,800
$218,800
*PROBLEM 5-6A
DAYTON DEPARTMENT STORE
Income Statement (Partial)
For the Year Ended November 30, 2015
Sales
Sales revenue ........................... $1,000,000
Less: Sales returns and
allowances ..................... 20,000
Net sales .................................... 980,000
Cost of goods sold
Inventory, Dec. 1, 2014 ............. $ 40,000
Purchases ................................. $585,000
*PROBLEM 5-7A
(1) (a) Cost of goods sold = Sales revenue – Gross profit
(b) Net income = Gross profit – Operating expenses
(c) Inventory = 2012 Inventory + Purchases – CGS
(d) Cash payments to suppliers = 2012 Accounts payable +
(e) Sales revenue = Cost of goods sold + Gross profit
(f) Operating expenses = Gross profit – Net income
(g) 2013 Inventory + Purchases – 2014 Inventory = CGS
(h) Cash payments to suppliers = 2013 Accounts payable +
(j) Net income = Gross profit – Operating expenses
(k) 2014 Inventory + Purchases – 2015 Inventory = CGS
(I) Accounts payable = 2014 Accounts payable +
*PROBLEM 5-7A (Continued)
(2) A decline in sales does not necessarily mean that profitability declined.
Profitability is affected by sales revenue, cost of goods sold, and
2013
2014
2015
Gross profit rate
$38,300 ÷ $55,000
= 69.6%
$35,200 ÷ $49,000
= 71.8%
$32,700 ÷ $47,000
= 69.6%
Profit margin
$3,400 ÷ $55,000
= 6.2%
$2,500 ÷ $49,000
= 5.1%
$4,100 ÷ $47,000
= 8.7%
*PROBLEM 5-8A
(a)
General Journal
Date
Account Titles and Explanation
Debit
Credit
Apr. 5
Purchases .....................................................
Accounts Payable .................................
1,200
1,200
7
Freight-In ......................................................
Cash ......................................................
50
50
9
Accounts Payable ........................................
Purchase Returns and Allowances .....
100
100
10
Accounts Receivable ...................................
Sales Revenue ......................................
600
600
12
Purchases .....................................................
Accounts Payable .................................
450
450
14
Accounts Payable ($1,200 – $100) ...............
Purchase Discounts ($1,100 X 2%) .......
Cash ($1,100 – $22) ..............................
1,100
22
1,078
17
Accounts Payable ........................................
Purchase Returns and Allowances .......
50
50
20
Accounts Receivable ...................................
Sales Revenue ......................................
600
600
21
Accounts Payable ($450 – $50) ...................
Purchase Discounts
($400 X 1%) ......................................
Cash ($400 – $4) ...................................
400
4
396
27
Sales Returns and Allowances ...................
Accounts Receivable ...........................
35
35
30
Cash ..............................................................
Accounts Receivable ...........................
600
600
*PROBLEM 5-8A (Continued)
(b)
Cash
Common Stock
4/1 Bal. 3,000
4/30 600
4/7 50
4/14 1,078
4/21 396
4/1 Bal. 7,000
4/30 Bal. 7,000
4/30 Bal. 2,076
Sales Revenue
4/10 600
4/20 600
Accounts Receivable
4/10 600
4/20 600
4/27 35
4/30 600
4/30 Bal. 1,200
4/30 Bal. 565
Sales Returns and Allowances
4/27 35
Inventory
4/30 Bal. 35
4/1 Bal. 4,000
4/30 Bal. 4,000
Purchases
4/5 1,200
4/12 450
Accounts Payable
4/9 100
4/14 1,100
4/5 1,200
4/12 450
4/30 Bal. 1,650
4/17 50
Freight-In
4/21 400
4/7 50
4/30 Bal. 0
4/30 Bal. 50
Purchase
Returns and Allowances
4/9 100
4/17 50
4/30 Bal. 150
Purchase Discounts
4/14 22
4/21 4
4/30 Bal. 26
*PROBLEM 5-8A (Continued)
(c) KOKOTT PRO SHOP
Trial Balance
April 30, 2015
Debit
Credit
Cash ......................................................................
Accounts Receivable ...........................................
Inventory ...............................................................
Common Stock .....................................................
Sales Revenue ......................................................
Sales Returns and Allowances ............................
Purchases .............................................................
Purchase Returns and Allowances .....................
Purchase Discounts .............................................
Freight-In ...............................................................
$2,076
565
4,000
35
1,650
50
$8,376
$7,000
1,200
150
26
$8,376
(d) KOKOTT PRO SHOP
Income Statement (Partial)
For the Month Ended April 30, 2015
Sales
Sales revenue ................................ $1,200
Less: Sales returns and
allowances .......................... 35
Net sales ........................................ 1,165
Cost of goods sold
Inventory, April 1 ........................... $4,000
Purchases ...................................... $1,650
SOLUTIONS TO PROBLEMS
PROBLEM 5-1B
(a) July 1 Inventory ....................................................... 1,800
3 Accounts Receivable .................................... 2,000
Cost of Goods Sold ...................................... 1,200
9 Accounts Payable ......................................... 1,800
Inventory
12 Cash ............................................................... 1,980
17 Accounts Receivable .................................... 1,800
Cost of Goods Sold ...................................... 1,080
Inventory ................................................ 1,080
18 Inventory ....................................................... 1,900
Inventory ....................................................... 125
20 Accounts Payable ......................................... 300
21 Cash ............................................................... 1,782
