Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-2A (40 minutes)—Perpetual and Gross Method
Aug. 1 Merchandise Inventory ………………………………. 7,500
Accounts Payable—Aron …………………….. 7,500
Purchased goods, terms 1/10, n/30.
5 Accounts Receivable—Baird ……………………… 5,200
Sales …………………………………………………… 5,200
Sold goods, terms 2/10, n/60.
9 Delivery Expense ……………………………………….. 125
Cash …………………………………………………… 125
Paid shipping charges on August 5 sale.
10 Sales Returns and Allowances …………………… 600
Accounts Receivable—Baird ……………….. 600
Customer returned merchandise.
10 Merchandise Inventory ………………………………. 400
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-2A (Concluded)
Aug. 15 Cash ………………………………………………………….. 4,508
Sales Discounts* ……………………………………….. 92
Accounts Receivable—Baird ……………….. 4,600
Received payment within discount period.
19 Cost of Goods Sold ……………………………………. 2,400
Merchandise Inventory ………………………… 2,400
Record cost of August 19 sale.
22 Sales Returns and Allowances …………………… 500
Accounts Receivable—Tux ………………….. 500
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-3A (40 minutes)
1. Net sales
Sales ……………………………………………………………………..
$225,600
Sales returns and allowances ……………………..
12,000
2. Cost of Merchandise purchased
Invoice cost of merchandise purchased …………………
$ 92,000
Purchases returns and allowances …………………………
(4,500)
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-3A (Continued)
3. Multiple-step income statement
VALLEY COMPANY
Income Statement
For Year Ended August 31
Sales ………………………………………………………….. $225,600
Less: Sales discounts ………………………………… $ 2,250
Sales returns and allowances …………… 12,000 14,250
Net sales ……………………………………………………. 211,350
General and administrative expenses
Office salaries expense …………………………... 28,500
Rent expense—Office space …………………… 3,600
Office supplies expense ………………………….. 400
Total general and administrative expenses … 32,500
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-3A (Concluded)
4. Single-step income statement
VALLEY COMPANY
Income Statement
For Year Ended August 31
Net sales ………………………………………………………... $211,350
Expenses
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-4A (30 minutes)
Closing entries
Aug. 31 Sales ……………………………………………………………. 225,600
Income Summary …………………………………… 225,600
Close temporary accounts with credit balances.
Aug. 31 Income Summary …………………………………………. 175,750
Sales Discounts …………………………………….. 2,250
Sales Returns and Allowances ……………….. 12,000
Cost of Goods Sold ……………………………….. 74,500
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-5A (60 minutes)
Part 1
Adjustment (a)
Jan 31 Store Supplies Expense …………………………….. 4,050
Store Supplies …………………………………….. 4,050
Record store supplies expense
($5,800 – $1,750).
Adjustment (b)
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-5A (Continued)
Part 2 Multiple-step income statement
NELSON COMPANY
Income Statement
For Year Ended January 31
Sales ………………………………………………………………. $111,950
Less: Sales discounts …………………………………….. $ 2,000
Sales returns and allowances ………………… 2,200 4,200
Net sales …………………………………………………………. 107,750
Cost of goods sold* ………………………………………… 40,000
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-5A (Concluded)
Part 3 Single–step income statement
NELSON COMPANY
Income Statement
For Year Ended January 31
Net sales ………………………………………………………. $107,750
Expenses
Part 4
Current assets
Cash …………………………………………………………………..
$ 1,000
Merchandise inventory ………………………………………..
10,900†
Store supplies …………………………………………………….
1,750
Prepaid insurance …………………………..…………………..
1,000*
Total current assets …………………………..………………..
$ 14,650
$ 1,000
$107,750
Gross margin …………………………………………………………
$ 67,750
Problem 4-6AD ONLINE APPENDIX (50 minutes)
NELSON COMPANY
Work Sheet
For Year Ended January 31
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
Account Title
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash ……………………………………
1,000
1,000
1,000
Merchandise inventory ………..
12,500
(d)
1,600
10,900
10,900
Store supplies……………………..
5,800
(a)
4,050
1,750
1,750
Prepaid insurance ……………….
2,400
(b)
1,400
1,000
1,000
Store equipment ………………….
42,900
42,900
Accum. depreciation—Store eq ….
15,250
(c)
1,525
16,775
Accounts payable ……………….
10,000
10,000
Common stock ……………………
5,000
5,000
Dividends …………………………...
2,200
2,200
2,200
Sales …………………………………..
111,950
111,950
111,950
Sales discounts …………………..
2,000
2,000
2,000
Sales returns & allowances …
2,200
2,200
2,200
Cost of goods sold ………………
38,400
(d)
1,600
40,000
40,000
Depreciation expense—Store eq ..
0
(c)
1,525
1,525
1,525
Insurance expense ………………
0
(b)
1,400
1,400
1,400
Rent expense—Selling Space …
Rent expense—Office Space ….
Store supplies expense ……….
0
(a)
4,050
4,050
4,050
Advertising expense ……………
______
______
______
______
______
Totals ………………………………….
169,200
8,575
8,575
170,725
170,725
111,950
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
PROBLEM SET B
Problem 4-1B (40 minutes)—Perpetual & Gross Method
May 2 Merchandise Inventory ………………………………. 10,000
Accounts Payable—Havel ……………………. 10,000
Purchased goods, terms 1/15, n/30.
9 Cash ………………………………………………………….. 2,500
Sales …………………………………………………… 2,500
Sold goods for cash.
9 Cost of Goods Sold ……………………………………. 2,000
Merchandise Inventory ………………………… 2,000
Record cost of May 9 sale.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-1B (Concluded)
May 17 Accounts Payable—Havel …………………………. 10,000
Merchandise Inventory* ………………………. 100
Cash …………………………..………………………. 9,900
Paid for goods within discount period.
*$10,000 x 1%
25 Accounts Payable—Duke ………………………….. 3,000
Merchandise Inventory* ………………………. 60
Cash …………………………..………………………. 2,940
Paid for goods within discount period.
*($3,650 – $650) x 2%
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-2B (40 minutes)—Perpetual and Gross Method
July 3 Merchandise Inventory ……………………………… 15,000
Accounts Payable—OLB …………………….. 15,000
Purchased goods, terms 1/10, n/30.
11 Delivery Expense ………………………………………. 300
Cash …………………………..……………………… 300
Paid shipping charges on July 7 sale.
12 Sales Returns and Allowances ………………….. 2,000
Accounts Receivable—Brill ………………… 2,000
Customer returned merchandise.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-2B (Concluded)
July 17 Cash …………………………………………………………. 9,310
Sales Discounts* ………………………………………. 190
Accounts Receivable—Brill ………………… 9,500
Received payment within discount period.
*($11,500 – $2,000) x 2%
24 Sales Returns and Allowances ………………….. 1,000
Accounts Receivable—Brown …………….. 1,000
Issued allowance on merchandise sold.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-3B (40 minutes)
1.
Net sales
Sales ………………………………………………………………………
$332,650
Sales returns and allowances ………………………..
2.
Cost of merchandise purchased
Invoice cost of merchandise purchases …………………..
$138,500
Purchases discounts received ………………………………..
Purchases returns and allowances ………………………….
Costs of transportation–in ……………………………………….
Total cost of merchandise purchases ……………………..
$134,600
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-3B (Continued)
3. Multiple-step income statement
BARKLEY COMPANY
Income Statement
For Year Ended March 31
Sales ………………………………………………………….. $332,650
Less: Sales discounts ……………………………….. $ 5,875
Sales returns and allowances …………… 20,000 25,875
Net sales ……………………………………………………. 306,775
General and administrative expenses
Office salaries expense …………………………... 40,750
Rent expense—Office space …………………… 3,800
Office supplies expense ………………………….. 1,100
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-3B (Concluded)
4. Single-step income statement
BARKLEY COMPANY
Income Statement
For Year Ended March 31
Net sales ………………………………………………………. $306,775
Expenses
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-4B (30 minutes)
Closing entries
March 31 Sales …………………………..……………………………. 332,650
Income Summary …………………………………… 332,650
Close temporary accounts with credit balances.
March 31 Income Summary ……………………………………….. 277,475
Sales Discounts …………………………………….. 5,875
March 31 Income Summary ……………………………………….. 55,175
Retained Earnings …………………………………. 55,175
Close Income Summary account.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-5B (60 Minutes)
Part 1
Adjustment (a)
Oct. 31 Store Supplies Expense …………………………….. 6,000
Store Supplies …………………………………….. 6,000
Record store supplies expense
($9,700 – $3,700).
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 4
Problem 4-5B (Continued)
Part 2 Multiple-step income statement
FOSTER PRODUCTS COMPANY
Income Statement
For Year Ended October 31
Sales ………………………………………………………………. $227,100
Less: Sales discounts …………………………………….. $ 1,000
Sales returns and allowances ………………… 5,000 6,000
Net sales …………………………………………………………. 221,100
Cost of goods sold * ……………………………………….. 78,500
Gross profit …………………………………………………….. 142,600
Part 3 Single–step income statement
FOSTER PRODUCTS COMPANY
Income Statement
For Year Ended October 31
Net sales …………………………………………………………. $221,100
Expenses
Cost of goods sold ……………………………………… $78,500