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CHAPTER 5
SOLUTIONS TO PROBLEMS—SET C
PROBLEM 5-1C
(a)
General Journal
Date
Account Titles
Debit
Credit
Apr. 2
Inventory ............................................................
Accounts Payable ......................................
8,700
8,700
5
Freight-out .........................................................
Cash ............................................................
200
200
6
Accounts Payable .............................................
Inventory .....................................................
400
400
11
Accounts Payable ($8,700 – $400) ...................
Cash ............................................................
Inventory ($8,300 X 2%) .............................
8,300
8,134
166
18
Inventory ............................................................
Accounts Payable ......................................
5,500
5,500
20
Inventory ............................................................
Cash ............................................................
180
180
PROBLEM 5-1C (Continued)
General Journal
Date
Account Titles
Debit
Credit
Apr. 23
Cash ................................................................
Sales Revenue ............................................
8,300
8,300
27
Accounts Payable ..............................................
Cash ............................................................
Inventory ($5,500 X 2%) .............................
5,500
5,390
110
29
Sales Returns and Allowances .........................
Cash ............................................................
180
180
PROBLEM 5-1C (Continued)
(b)
Cash
4/1 Bal. 9,000
4/5 200
4/26 2,300
4/27 5,390
4/29 180
4/30 Bal. 2,596
Accounts Receivable
4/4 6,000
4/30 3,980
4/13 6,000
4/30 Bal. 3,980
4/29 120
4/27 110
4/30 2,500
4/30 Bal. 8,544
Accounts Payable
4/6 400
4/2 8,700
Sales Revenue
4/4 6,000
4/30 Bal. 18,280
Sales Returns and Allowances
4/29 180
4/30 Bal. 180
Sales Discounts
4/13 120
4/30 Bal. 120
Cost of Goods Sold
Freight-Out
4/5 200
4/30 Bal. 200
PROBLEM 5-1C (Continued)
(c) CURTAIN DISTRIBUTING COMPANY
Income Statement (Partial)
For the Month Ended April 30, 2014
Sales
Sales revenue ..................................................... $18,280
Less: Sales returns and allowances ................ $180
(d) Profit margin: ($6,320 – $2,050) ÷ $17,980 = 24%
PROBLEM 5-2C
July 1 Inventory ............................................................... 2,700
Accounts Payable ......................................... 2,700
9 Accounts Payable ................................................ 2,700
Cash ............................................................... 2,646
Inventory ($2,700 X .02) ................................ 54
12 Cash ...................................................................... 2,871
Sales Discounts ($2,900 X .01) ............................ 29
Accounts Receivable ................................... 2,900
17 Accounts Receivable ........................................... 2,000
Sales Revenue .............................................. 2,000
PROBLEM 5-2C (Continued)
July 22 Cost of Goods Sold ............................................... 1,800
Inventory ......................................................... 1,800
PROBLEM 5-3C
(a)
General Journal
Date
Account Titles
Debit
Credit
Apr. 4
Inventory .............................................................
Accounts Payable ......................................
980
980
6
Inventory .............................................................
Cash ............................................................
60
60
11
Inventory .............................................................
Cash ............................................................
300
300
13
Accounts Payable ($980 – $130) ......................
Cash ............................................................
Inventory ($850 X 2%) ................................
850
833
17
14
Inventory .............................................................
Accounts Payable ......................................
1,300
1,300
PROBLEM 5-3C (Continued)
Date
Account Titles
Debit
Credit
Apr. 20
Cash ................................................................
Accounts Receivable ................................
500
500
21
Accounts Payable ..............................................
1,300
(b)
Cash
4/1 Bal. 2,500
4/15 50
4/6 60
4/11 300
Accounts Receivable
4/8 750
4/18 660
4/20 500
4/27 30
4/30 550
4/30 Bal. 330
Accounts Payable
4/10 130
4/13 850
4/4 980
4/14 1,300
4/1 Bal. 4,200
4/30 Bal. 4,200
Sales Revenue
4/8 750
4/18 660
4/30 Bal. 1,410
PROBLEM 5-3C (Continued)
Cost of Goods Sold
4/8 480
(c) HIGHLAND TENNIS SHOP
Trial Balance
April 30, 2014
Debit
Credit
Cash .........................................................................
Accounts Receivable ..............................................
$1,086
330
(d) HIGHLAND TENNIS SHOP
Income Statement (Partial)
For the Month Ended April 30, 2014
Sales
Sales revenues .................................................................... $1,410
PROBLEM 5-4C
(a) PARKLAND DEPARTMENT STORE
Income Statement
For the Year Ended December 31, 2014
Sales
Sales revenue ....................................... $626,000
Less: Sales returns and
Depreciation expense .......................... 23,400
Utilities expense ................................... 11,000
Insurance expense ............................... 8,400
Maintenance and repairs expense ...... 6,200
Total operating expenses ............ 160,000
Income from operations .............................. 46,000
PARKLAND DEPARTMENT STORE
Retained Earnings Statement
For the Year Ended December 31, 2014
Retained earnings, January 1 .......................................................... $19,200
Add: Net income ............................................................................. 28,300
PROBLEM 5-4C (Continued)
PARKLAND DEPARTMENT STORE
Balance Sheet
December 31, 2014
Assets
Current assets
Cash .................................................... $ 28,000
Accounts receivable .......................... 45,500
Inventory ............................................. 43,000
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable ................................................. $ 73,300
Mortgage payable ................................................. 20,000
Salaries and wages payable ................................ 3,500
PROBLEM 5-4C (Continued)
(b) Profit margin: $28,300 ÷ $618,000 = 4.6%
(c) Revised net income = Current net income + increase in gross profit –
increase in operating expenses
$51,000 = $28,300 + $50,500 – $27,800
Revised net sales = Current net sales + .25 (current net sales)
$772,500 = $618,000 + $154,500
