Wild, Shaw, Financial & Managerial Accounting, 8e 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
Total expenses …………………………………………. 87,000
Net income …………………………………………………. $ 49,850
Wild, Shaw, Financial & Managerial Accounting, 8e 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, Shaw, Financial & Managerial Accounting, 8e 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
Wild, Shaw, Financial & Managerial Accounting, 8e 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).
Wild, Shaw, Financial & Managerial Accounting, 8e 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
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
$ 67,750
Wild, Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 4
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
Retained earnings ……………….
Dividends …………………………...
2,200
2,200
2,200
Sales …………………………………..
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
Sales salaries expense ………..
17,500
17,500
17,500
Office salaries expense ……….
17,500
17,500
17,500
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 ………………………………….
8,575
8,575
Wild, Shaw, Financial & Managerial Accounting, 8e 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.
4 Accounts Receivable—Rath ……………………….. 11,000
Sales …………………………………………………… 11,000
Sold goods, terms 2/10, n/60.
9 Cost of Goods Sold ……………………………………. 2,000
Merchandise Inventory ………………………… 2,000
Record cost of May 9 sale.
10 Merchandise Inventory ………………………………. 3,650
Accounts Payable—Duke ……………………. 3,650
Purchased goods, terms 2/15, n/60.
Wild, Shaw, Financial & Managerial Accounting, 8e 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, Shaw, Financial & Managerial Accounting, 8e 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.
7 Accounts Receivable—Brill ……………………….. 11,500
Sales ………………………………………………….. 11,500
Sold goods, terms 2/10, n/60.
12 Sales Returns and Allowances ………………….. 2,000
Accounts Receivable—Brill ………………… 2,000
Customer returned merchandise.
12 Merchandise Inventory ……………………………… 1,450
Cost of Goods Sold ……………………………. 1,450
Returned goods to inventory.
Wild, Shaw, Financial & Managerial Accounting, 8e 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%
21 Cost of Goods Sold …………………………………… 7,000
Merchandise Inventory ……………………….. 7,000
Record cost of July 21 sale.
24 Sales Returns and Allowances ………………….. 1,000
Accounts Receivable—Brown …………….. 1,000
Issued allowance on merchandise sold.
Wild, Shaw, Financial & Managerial Accounting, 8e 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, Shaw, Financial & Managerial Accounting, 8e 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, Shaw, Financial & Managerial Accounting, 8e 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, Shaw, Financial & Managerial Accounting, 8e 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
Wild, Shaw, Financial & Managerial Accounting, 8e 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, Shaw, Financial & Managerial Accounting, 8e 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
Wild, Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 4
Problem 4-5B (Concluded)
Part 4
Current assets
Cash ………………………………………………………………… $ 7,400
Merchandise inventory …………………………………….. 21,300
Store supplies ………………………………………………….. 3,700
Prepaid insurance ……………………………………………. 3,800*
Wild, Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 4
Problem 4-6BD ONLINE APPENDIX (50 minutes)
FOSTER PRODUCTS COMPANY
Work Sheet
For Year Ended October 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 …………………………………….
7,400
7,400
7,400
Merchandise inventory …………
24,000
(d)
2,700
21,300
21,300
Store supplies ………………………
9,700
(a)
6,000
3,700
3,700
Prepaid insurance ………………..
6,600
(b)
2,800
3,800
3,800
Store equipment …………………..
81,800
81,800
81,800
Accum. depreciation—Store eq …..
32,000
(c)
3,000
35,000
Accounts payable ………………..
18,000
18,000
Common stock …………………….
3,000
3,000
Dividends …………………………….
2,000
2,000
2,000
Sales ……………………………………
227,100
227,100
227,100
Sales discounts ……………………
1,000
1,000
1,000
Sales returns and allowances
5,000
5,000
5,000
Cost of goods sold ……………….
75,800
(d)
2,700
78,500
78,500
Depreciation expense—Store eq …
0
(c)
3,000
3,000
3,000
Sales salaries expense …………
31,500
31,500
31,500
Office salaries expense ………..
31,500
31,500
31,500
Insurance expense ……………….
0
(b)
2,800
2,800
2,800
Rent expense—Selling space ….
13,000
13,000
13,000
13,000
13,000
13,000
Store supplies expense ………..
0
(a)
6,000
6,000
6,000
Advertising expense …………….
______
______
______
______
______
Net income …………………………..
______
______
Wild, Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 4
SERIAL PROBLEM — SP 4
Serial Problem — SP 4, Business Solutions (120 minutes) Part 1
Journal entries
Jan. 4 Wages Expense ……………………………………….623 125
Wages Payable ………………………………………..210 500
Cash …………………………………………………101 625
Purchased merchandise on credit.
9 Cash ………………………………………………………..101 2,668
Accounts Receivable—Gomez Co. …….106.6 2,668
Collected accounts receivable.
11 Accounts Receivable—Alex’s Eng. Co …………106.1 5,500
Unearned Computer Services Revenue ……….236 1,500
Computer Services Revenue ……………..403 7,000
Completed work on project.