Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Bal. —
5,000 e. 1,000
*
**
Net sales:
Sales
Less sales returns and allowances
The balance of Cash is a credit because there is no data about the beginning balance
and entries have been posted only to the credit side of the account.
$2,800 – $1,000 = $1,800
a.
Merchandise Inventory
E8A. Preparation of the Income Statement: Perpetual Inventory System
Infosys Company
Income Statement
For the Year Ended December 31, 2014
$475,000
23,500
6-10
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
2,000 2,600
600
—
350 11/15 1,500 1,500 350
**
$297,000
15,200
Sales
Less sales returns and allowances
11/20
11/15
Income Statement
For the Year Ended December 31, 2014
Net sales:
11/20
Bal.
2,600
E10A. Recording Sales: Perpetual Inventory System
Sales
Merchandise Inventory
11/20
11/20 600
Cash
11/15
The balance of Merchandise Inventory is a credit because there is no data about the be-
ginning balance and a larger amount has been posted to the credit side of the account.
E11A. Preparation of the Income Statement: Periodic Inventory System
Proof General Store
11/25
11/15
Cost of Goods Sold
Sales Returns and Allowances Accounts Receivable
6-11
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
(p) $1,344
76 (a)
b. 270 1,000 5,000 5,000
—
270
**
b.
Bal.
Purchases
a.
e.
Sales returns and allowances
80
Sales
2014 2013 2012
$1,144
Freight-In
Cash
E12A. Merchandising Income Statement: Missing Data, Multiple Years
(h)
$1,396
96
(in thousands)
E13A. Recording Purchases: Periodic Inventory System
The balance of Cash is a credit because there is no data about the beginning balance
and entries have been posted only to the credit side of the account.
Accounts Payable
a.
6-12
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
2,000
11/20
Bal. —
2,600
Resource CD and website.
Note to Instructor: Solutions for Exercises: Set B are provided separately on the Instructor's
Date of purchase:
Date of payment:
E15A. Foreign Merchandising Transactions
11/15
Sales Returns and Allowances
11/15 600
11/202,600
E14A. Recording Sales: Periodic Inventory System
Sales
Accounts Receivable
600
11/25
Cash
6-13
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
2014 %* 2013 %*
$525,932 100.0% $475,264 100.0%
2.
*Rounded
The primary reason for this increase was that general and administrative expenses
increased from 8.9 percent of net sales to 12.0 percent. Selling expenses actually
sold and the company's overhead (general and administrative expenses).
P1. Forms of the Income Statement
Problems
Net sales
Matuska Tools Corporation
Income Statements
For the Years Ended July 31, 2014 and 2013
Income from operations decreased from 2013 to 2014 in absolute amount by $44,202
($110,628 – $66,426) and decreased in percentage from 23.3 percent to 12.6 percent
decreased as a percentage of net sales. Management must examine its cost of goods
6-14
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
$162,000
2,000
$32,625
$12,875
2,400
Net sales:
Sales
Less sales returns and allowances
Store salaries expense
P2. Merchandising Income Statement: Perpetual Inventory System
Operating expenses:
Selling expenses:
General and administrative expenses:
Office salaries expense
Rent expense
Murray’s Furniture Store
Income Statement
For the Year Ended June 30, 2014
6-15
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
2.
the same industry, and covering the same period of time.
statement.
Fourth, when possible, an analysis would also include comparing the ratios above
Third, the net income can be compared with the total assets of the business to com-
Second, the components of gross margin and operating expenses can be examined.
The gross margin is $96,300 or 60.2 percent of net sales; the operating expenses are
$80,865, or 50.5 percent of net sales. Net income can be improved by increasing the
gross margin and/or by decreasing the operating expenses.
sales of $160,000. This is a profit margin of 9.6 percent.
This question is meant to link the income statements in this chapter to the financial
P2. Merchandising Income Statement: Perpetual Inventory System (Concluded)
First, overall, the statement shows net income of $15,435, which was earned on net
6-16
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
7 3,000
7 1,800
8 6,000
9 254
10 9,000
14 2,400
14 1,440
14 600
17 3,000
19 1,800
Received check from James William
P3. Merchandising Transactions: Perpetual Inventory System
Cash
Company, terms n/30, FOB shipping point;
Purchased merchandise from Rourke
Cash
Sold merchandise for cash
n/30, FOB shipping point
Accounts Receivable
Accounts Payable
Returned damaged merchandise to
Rourke Company paid freight costs
Company, terms n/30, FOB shipping point
Freight-In
Paid shipping charges to Leverage
Company for March 8 purchase
Cost of Goods Sold
Mar.
2014
Accounts Receivable
n/30, FOB shipping point
Sold merchandise to James William, terms
Purchased merchandise from Leverage
Merchandise Inventory
Merchandise Inventory
To transfer cost of merchandise sold to
Cost of Goods Sold account
Sold merchandise to Deepak Soni, terms
Cost of Goods Sold account
Leverage Company for credit
To transfer cost of merchandise sold to
Cost of Goods Sold
6-17
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
19 1,080
20 9,600
21 5,400
24 200
24 120
2.
Cash rebates should not be recorded as revenue because doing so overstates reve-
nues. (Some companies have gotten into trouble for following this practice.) Cash
Mar.
$6,000 – $600 = $5,400
Accepted return from Deepak Soni
Accounts Payable
P3. Merchandising Transactions: Perpetual Inventory System (Concluded)
to Merchandise Inventory account
To transfer cost of merchandise returned
Company for purchase of March 8, net of
Made payment on account to Rourke
Made payment on account to Leverage
2014
Company for purchase of March 10
Merchandise Inventory
return on March 14
Sales Returns and Allowances
Cost of Goods Sold
Accounts Payable
Cost of Goods Sold account
To transfer cost of merchandise sold to
6-18
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
