PROBLEM 5-3A (Continued)
(c) Nov. 30 Sales Revenue …………………………………. 720,000
30 Income Summary …………………………….. 689,900
Sales Returns and
Allowances ……………………………. 8,000
Cost of Goods Sold …………………… 518,000
Salaries and Wages Expense …….. 96,000
30 Income Summary …………………………….. 32,100
Owner’s Capital ………………………… 32,100
PROBLEM 5-4A
(a)
General Journal J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
Apr. 5
Inventory ………………………………………
Accounts Payable …………………..
120
201
1,200
1,200
7
Inventory ………………………………………
Cash ………………………………………
120
101
50
50
Sales Revenue ……………………….
401
Cost of Goods Sold ……………………….
Inventory ……………………………….
505
120
540
540
12
Inventory ………………………………………
Accounts Payable …………………..
120
201
670
670
14
($1,100 X 2%) ………………………
Cash ………………………………………
120
101
1,078
Accounts Payable ($1,200 – $100) ….
Inventory
201
1,100
17
Accounts Payable …………………………
Inventory ……………………………….
201
120
70
70
21
Accounts Payable ($670 – $70) ………
201
600
Inventory
($600 X 1%) …………………………
Cash ………………………………………
120
101
594
PROBLEM 5-4A (Continued)
J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
Apr. 27
Sales Returns and Allowances ……
Accounts Receivable …………..
412
112
20
20
30
Cash ………………………………………….
101
(b)
Cash No. 101
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 1
7
Balance
J1
50
1,800
1,750
Accounts Receivable No. 112
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 10
20
J1
J1
900
610
900
1,510
Inventory No. 120
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 1
5
7
9
10
Balance
J1
J1
J1
J1
1,200
50
100
540
2,500
3,700
3,750
3,650
3,110
PROBLEM 5-4A (Continued)
Accounts Payable No. 201
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 5
9
J1
J1
100
1,200
1,200
1,100
Owner’s Capital No. 301
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 1
Balance
4,300
Sales Revenue No. 401
Date
Explanation
Ref.
Debit
Credit
Balance
Sales Returns and Allowances No. 412
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 27
J1
20
20
Cost of Goods Sold No. 505
Date
Explanation
Ref.
Debit
Credit
Balance
PROBLEM 5-4A (Continued)
(c) YOLANDA’S DISCORAMA
Trial Balance
April 30, 2017
Debit
Credit
$5,810
Cash ……………………………………………………………..
Accounts Receivable ………………………………………
$ 978
590
*PROBLEM 5-5A
(a) GAOLEE FASHION CENTER
Worksheet
For the Year Ended November 30, 2017
Account Titles
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Key: (a) Supplies used, (b) Depreciation expense—equipment, (c) Accrued interest payable, (d) Adjustment of inventory.
Cash
Accounts Receivable
Accum. Depreciation—
Equipment
Notes Payable
Accounts Payable
Owner’s Capital
Allowances
Cost of Goods Sold
Salaries and Wages
Expense
Advertising Expense
Rent Expense
Totals
Supplies Expense
Depreciation Expense
20,700
30,700
8,800
497,400
140,000
24,400
24,000
984,700
28,000
60,000
48,500
93,000
984,700
(d) 300
(a) 3,600
(b) 11,500
(b) 11,500
20,700
30,700
8,800
497,700
140,000
24,400
24,000
3,600
11,500
39,500
60,000
48,500
93,000
8,800
497,700
140,000
24,400
24,000
3,600
11,500
20,700
30,700
39,500
60,000
48,500
93,000
*PROBLEM 5-5A (Continued)
(b) GAOLEE FASHION CENTER
Income Statement
For the Year Ended November 30, 2017
Sales revenues
Sales revenue ……………………………………… $755,200
Less: Sales returns and
Operating expenses
Salaries and wages expense ………….. $140,000
Advertising expense ………………………. 24,400
Rent expense ………………………………… 24,000
Income from operations……………………………… 2,400
Other expenses and losses
*PROBLEM 5-5A (Continued)
GAOLEE FASHION CENTER
Owner’s Equity Statement
For the Year Ended November 30, 2017
Owner’s Capital, December 1, 2016 …………………….. $93,000
GAOLEE FASHION CENTER
Balance Sheet
November 30, 2017
Assets
Current assets
Cash ………………………………………….. $ 20,700
Accounts receivable …………………… 30,700
Property, plant, and equipment
*PROBLEM 5-5A (Continued)
GAOLEE FASHION CENTER
Balance Sheet (Continued)
November 30, 2017
Liabilities and Owner’s Equity
Current liabilities
Notes payable (due next year) …………………………... $20,000
Accounts payable …………………………………………….. 48,500
(c) Nov. 30 Supplies Expense………………………………. 3,600
Supplies …………………………………….. 3,600
30 Interest Expense ……………………………….. 3,800
Interest Payable ………………………….. 3,800
*PROBLEM 5-5A (Continued)
(d) Nov. 30 Sales Revenue ……………………………….. 755,200
Income Summary …………………….. 755,200
Advertising Expense ……………….. 24,400
Utilities Expense ……………………… 14,000
Maintenance and Repairs
Expense ………………………………. 12,100
30 Owner’s Capital ……………………………… 1,400
Income Summary …………………….. 1,400
*PROBLEM 5-5A (Continued)
(e) GAOLEE FASHION CENTER
Post-Closing Trial Balance
November 30, 2017
Debit
Credit
Cash ……………………………………………………….
Accounts Receivable ………………………………..
$ 20,700
30,700
*PROBLEM 5-6A
DONALDSON DEPARTMENT STORE
Income Statement (Partial)
For the Year Ended November 30, 2017
Sales revenues
Sales revenue ……………………… $1,000,000
Less: Sales returns and
Cost of goods sold
Inventory, Dec. 1, 2016 …………. $ 40,000
Purchases …………………………... $585,000
Less: Purchase returns
Cost of goods purchased……… 583,500
Cost of goods available
for sale ……………………… 623,500
*PROBLEM 5-7A
(1) (a) Cost of goods sold = Sales revenue – Gross profit
= $55,000 – $38,300 = $16,700
(d) Cash payments to suppliers = 2014 Accounts payable +
Purchases – 2015 Accounts payable
= $3,200 + $14,200 – $3,600 = $13,800
(e) Sales revenue = Cost of goods sold + Gross profit
= $14,800 + $35,200 = $50,000
(h) Cash payments to suppliers = 2015 Accounts payable +
Purchases – 2016 Accounts Payable
= $3,600 + $18,200 [from (g)] – $2,500
= $19,300
(k) 2016 Inventory + Purchases – 2017 Inventory = CGS
Inventory = 2016 Inventory + Purchases – CGS
= $8,100 + $13,200 – $14,300 = $7,000
*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
operating expenses. If cost of goods sold or operating expenses
2015
2016
2017
Gross profit rate
$47,000 = 69.6%
$38,300 ÷ $55,000
$35,200 ÷ $50,000
$32,700 ÷
*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
Purchase Returns and Allowances …..
10
Accounts Receivable ……………………………..
Sales Revenue ………………………………..
600
600
12
Purchases ……………………………………………..
Accounts Payable …………………………...
450
450
17
Accounts Payable ………………………………….
Purchase Returns and Allowances …….
50
50
20
Accounts Receivable ……………………………..
Sales Revenue ………………………………..
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
*PROBLEM 5-8A (Continued)
(b)
Cash
Sales Revenue
4/1 Bal. 3,000
4/30 600
4/7 50
4/14 1,078
4/21 396
4/10 600
4/20 600
4/30 Bal. 1,200
4/30 Bal. 2,076
Accounts Receivable
4/10 600
4/27 35
4/30 Bal. 35
4/30 Bal. 565
Purchases
Inventory
4/5 1,200
4/1 Bal. 4,000
4/12 450
4/30 Bal. 4,000
4/30 Bal. 1,650
4/17 50
4/30 Bal. 150
4/21 400
4/30 Bal. 0
Purchase Discounts
4/14 22
4/21 4
4/1 Bal. 7,000
4/30 Bal. 26
4/30 Bal. 7,000
4/7 50
4/30 Bal. 50
*PROBLEM 5-8A (Continued)
(c) GAGE PRO SHOP
Trial Balance
April 30, 2017
Debit
Credit
Cash ……………………………………………………….……
$2,076
(d) GAGE PRO SHOP
Income Statement (Partial)
For the Month Ended April 30, 2017
Sales revenues
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
Less: Purchase returns
and allowances ……………… $150
Purchase discounts ……….. 26 176
Net purchases ………………………….. 1,474
Add: Freight-in ………………………… 50