PROBLEM 5-5C
KRITEK COMPANY
Income Statement
For the Year Ended December 31, 2014
Sales
Sales revenue ………………………………….. $708,000*
Less: Sales discounts …………………….. 11,300
Net sales …………………………………………. 696,700
Total operating expenses ………….. 169,800
Income from operations ………………………….. 66,900
Other revenues and gains
Interest revenue ………………………………. 5,300
Other expenses and losses
PROBLEM 5-6C
(a) Nov. 30 Supplies Expense ………………………………. 5,700
Supplies ($8,800 – $3,100) …………… 5,700
(b)
Supplies
11/30 Bal. 8,800
11/30 5,700
11/30 Bal. 3,100
Supplies Expense
11/30 5,700
11/30 Bal. 5,700
11/30 20,000
11/30 Bal. 61,000
11/30 20,000
11/30 Bal. 20,000
11/30 Bal. 4,400
11/30 3,000
11/30 Bal. 3,000
11/30 3,000
11/30 Bal. 3,000
Interest Expense
11/30 4,400
11/30 Bal. 4,400
Interest Payable
11/30 4,400
PROBLEM 5-6C (Continued)
(c) RUNWAY FASHION CENTER
Adjusted Trial Balance
November 30, 2014
Credit
$1,015,400
Cash ………………………………………………………
Accounts Receivable ………………………………
Equipment ……………………………………………..
Accumulated Depreciation—
Equipment ………………………………………….
Notes Payable ………………………………………..
Accounts Payable …………………………………..
Interest Payable …………………………..…………
Income Taxes Payable …………………………..
Common Stock ……………………………………….
Retained Earnings ………………………………….
Dividends ……………………………………………….
Sales Revenue ………………………………………..
$ 61,000
62,000
17,800
4,400
3,000
80,000
30,000
757,200
PROBLEM 5-6C (Continued)
(d) RUNWAY FASHION CENTER
Income Statement
For the Year Ended November 30, 2014
Sales
Operating expenses
Salaries and wages expense ……………… $110,000
Advertising expense …………………………. 26,400
Rent expense ……………………………………. 24,000
Depreciation expense ……………………….. 20,000
Utilities expense ……………………………….. 14,000
Maintenance and repairs expense ……… 12,100
Freight-out ………………………………………… 11,700
RUNWAY FASHION CENTER
Retained Earnings Statement
For the Year Ended November 30, 2014
Retained earnings, December 1, 2013 ……….. $30,000
Plus: Net income ……………………………………. 14,300
PROBLEM 5-6C (Continued)
RUNWAY FASHION CENTER
Balance Sheet
November 30, 2014
Assets
Current assets
Cash …………………………………………. $37,700
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable …………………………………………….. $24,000
Accounts payable ………………………………………. 17,800
Interest payable ………………………………………….. 4,400
PROBLEM 5-7C
EHLINGER DEPARTMENT STORE
Income Statement (Partial)
For the Year Ended December 31, 2014
Sales
Sales revenue ……………………. $702,000
Net purchases …………………… 437,600
Add: Freight-in ………………… 7,200
Cost of goods purchased …… 444,800
Cost of goods available for
PROBLEM 5-8C
(a)
2013 2014 2015
Cost of goods sold:
Beginning inventory $ 16,000 $ 11,300 $ 16,400
(b)
2013 2014 2015
Sales revenue $229,700 $227,600 $222,000
(c)
2013 2014 2015
Beginning accounts payable $ 17,000 $ 28,000 $ 24,700
(d) Gross profit rate 34.0% 33.8% 35.4%
No. Even though sales declined in 2015 from each of the two prior years,
the gross profit rate increased. This means that cost of goods sold
*PROBLEM 5-9C
(a)
General Journal
Date
Account Titles and Explanation
Debit
Credit
Apr. 4
Purchases ………………………………………………….
980
Accounts Payable ………………………………..
980
6
Freight-In ……………………………………………………
60
Cash …………………………………………………….
60
8
Accounts Receivable ………………………………….
750
Sales Revenue ……………………………………..
750
10
Accounts Payable ………………………………………
130
Purchase Returns and Allowances ………..
130
11
Purchases ………………………………………………….
300
Cash …………………………………………………….
300
13
Accounts Payable ($980 – $130) ………………….
850
Cash …………………………………………………….
833
Purchase Discounts ($850 X 2%) …………..
17
14
Purchases ………………………………………………….
Accounts Payable ………………………………..
15
Cash ……………………………………………………….…
50
Purchase Returns and Allowances ………..
50
17
Freight-In ……………………………………………………
60
Cash …………………………………………………….
60
18
Accounts Receivable ………………………………….
660
Sales Revenue ……………………………………..
660
20
Cash ……………………………………………………….…
500
Accounts Receivable …………………………..
500
*PROBLEM 5-9C (Continued)
Date
Account Titles and Explanation
Debit
Credit
Apr. 21
Accounts Payable ……………………………………….
1,300
Cash …………………………………………………….
1,261
Purchase Discounts ($1,300 X 3%) ………..
Sales Returns and Allowances …………………….
Accounts Receivable …………………………..
Cash …………………………………………………………..
Accounts Receivable …………………………..
(b)
Cash
4/1 Bal. 2,500
4/6 60
4/15 50
4/11 300
4/20 500
4/13 833
4/30 550
4/17 60
4/21 1,261
4/30 Bal. 1,086
4/8 750
4/20 500
4/18 660
4/27 30
4/30 550
4/30 Bal. 330
4/21 1,300
4/30 Bal. 0
4/1 Bal. 4,200
4/30 Bal. 4,200
4/8 750
4/18 660
Inventory
4/1 Bal. 1,700
4/30 Bal. 1,700
Accounts Payable
4/10 130
4/4 980
4/13 850
4/14 1,300
4/30 Bal. 1,410
*PROBLEM 5-9C (Continued)
Sales
Returns and Allowances
4/27 30
4/30 Bal. 30
4/30 Bal. 56
Purchases
4/4 980
4/11 300
4/14 1,300
4/30 Bal. 2,580
4/17 60
4/30 Bal. 120
Purchase
Returns and Allowances
4/10 130
4/15 50
4/30 Bal. 180
Purchase Discounts
4/13 17
4/21 39
Freight–In
4/6 60
(c) HIGHLAND TENNIS SHOP
Trial Balance
April 30, 2014
Debit Credit
Cash ………………………………………………………………. $1,086
Accounts Receivable ………………………………………. 330
PROBLEM 5-9C (Continued)
(d) HIGHLAND TENNIS SHOP
Income Statement (Partial)
For the Month Ended April 30, 2014
Sales
Sales revenue ……………………… $1,410
Less: Sales returns and
allowances ……………….. 30
Net sales ……………………………… 1,380
Cost of goods sold