chapter
5
Accounting for
Merchandising Businesses
_____________________________________________
OPENING COMMENTS
Chapter 5 introduces the merchandising form of business. It opens by contrasting the income statements of
service and merchandising businesses. The majority of the chapter is focused on the presentation of
inventory, purchase of inventory and sale of inventory including returns, discounting, and freight charges.
The 13th edition of Financial and Managerial Accounting focuses on the perpetual inventory method, since
computerized accounting and inventory systems have made it feasible for even small merchandisers to track
each purchase and sale of inventory. The text illustrates how to record transactions related to the purchase
and sale of merchandise under the perpetual inventory system. It also presents a chart of accounts and an
overview of the accounting cycle for a merchandiser using a perpetual inventory system. The chapter then
presents the financial statements for a merchandising business and summarizes the essential differences
between the periodic and perpetual inventory systems.
84 Chapter 5 Accounting for Merchandising Businesses
After studying the chapter, your students should be able to:
2. Describe and illustrate the accounting for merchandise transactions.
4. Describe the adjusting and closing process for a merchandising business.
5. Describe and illustrate the use of the ratio of sales to assets in evaluating a company’s operating
performance.
KEY TERMS
account form
accounts payable subsidiary ledger
accounts receivable subsidiary ledger
administrative expenses (general expenses)
controlling account
cost of merchandise sold
credit memorandum (credit memo)
credit period
credit terms
debit memorandum (debit memo)
FOB (free on board) destination
FOB (free on board) shipping point
general ledger
physical inventory
purchases discounts
purchases returns and allowances
ratio of sales to assets
report form
sales
sales discounts
selling expenses
single-step income statement
special journals
subsidiary ledger
trade discounts
Chapter 5 Accounting for Merchandising Businesses 85
STUDENT FAQS
• How do you handle a business that is primarily a service business but has some merchandising
aspects?
• In a merchandising (retail) type businesses, how can you use the periodic inventory method and still
use a computer to monitor with inventory?
• Which method is more current or is more correct so that what is in inventory can be determined at any
given time?
• If you are viewing a chart of accounts, how do you tell if it is for a periodic or perpetual inventory
system?
• What accounts are in the chart of accounts of a periodic inventory system?
• What accounts are in the chart of accounts of a perpetual inventory system?
• Which inventory method will yield the most net income?
OBJECTIVE 1
Distinguish between the activities and financial statements of service and merchandising
businesses.
SYNOPSIS
The differences between service and merchandising businesses are discussed in this chapter. The first
objective describes the operating cycle process for merchandising businesses in Exhibit 1. The time in days
86 Chapter 5 Accounting for Merchandising Businesses
of this operating cycle differs vastly depending upon the type of merchandise sold. Financial statements
reflect the differences between these types of businesses. The revenue of a service business is often reported
as fees earned; for a merchandising business, it is reported as sales. Condensed income statements from a
service business (H&R Block) and a retail business (The Home Depot) illustrate how these statements
differ.
Key Terms and Definitions
• Cost of Merchandise Sold – The cost that is reported as an expense when merchandise is sold.
• Gross Profit – Sales minus the cost of merchandise sold.
Relevant Example Exercises and Exhibits
• Example Exercise 5-1 Gross Profit
• Exhibit 1 – The Operating Cycle for a Merchandising Business
SUGGESTED APPROACH
The goal of Objective 1 is to introduce the student to the basic skeleton of the income statement for the
merchandiser.
Sales
– Cost of Merchandise Sold
Gross Profit
– Operating Expenses
Net Income
To demonstrate the need for this new format, ask your students the following question: What is the largest
expense incurred by a retail store, such as Target or Old Navy? (Answer: the cost of the merchandise that
is sold to the customer)
Chapter 5 Accounting for Merchandising Businesses 87
Objective 1 also introduces Merchandise Inventory, explaining that this account is reported as a current
asset on the balance sheet.
OBJECTIVE 2
Describe and illustrate the accounting for merchandise transactions.
SYNOPSIS
NetSolutions becomes a retailer in this chapter and its transactions are illustrated by using a simplified
general journal. Using a perpetual inventory system, the merchandise available for sale and the cost of
goods sold are continuously updated. As computerized inventory is widely used, this method has become
more common. When merchandise is purchased by the retailer, an inventory account is debited and the
credit goes to either Cash or Accounts Payable. The terms laying out how the merchandise is to be paid for
are called credit terms. If payment on delivery is required, the terms are cash or net cash. If the buyer is
permitted an amount of time to pay, it is called the credit period. The credit period usually begins with the
date of the invoice. Terms expressed as 2/10, n/30 means a discount of 2% will be given if the invoice is
paid within 10 days of the invoice date and the net amount is due within 30 days. Exhibit 2 shows a typical
invoice with credit due terms, and Exhibit 3 illustrates how to count days for the credit terms. Discounts
offered by the seller are called sales discounts, while discounts taken by the buyer are called purchase
discounts. Under the perpetual inventory system, the buyer debits Merchandise Inventory and credits
Accounts Payable assuming all purchase discounts are taken. In this way, merchandise inventory shows the
net amount paid to the buyer.
88 Chapter 5 Accounting for Merchandising Businesses
account. These freight terms are summarized in Exhibit 6. Exhibit 7 summarizes how these transactions are
journalized using T accounts.
Another topic that is addressed in the chapter is sales tax. When a retailer sells merchandise to the end
consumer, a liability for sales tax is incurred. The seller collects the taxes at the time of sale. Accounts
receivable is debited for the total amount, Sales is credited for only the price of the merchandise, and an
additional amount is credited to the sales tax payable account. Businesses that sell to other businesses for
resale do not charge sales taxes. These businesses may offer trade discounts to other businesses that are not
offered to consumers. Usually, only the net price is recorded in this type of transaction.
Key Terms and Definitions
• Accounts Payable Subsidiary Ledger – The subsidiary ledger containing the individual
accounts with suppliers (creditors).
• Accounts Receivable Subsidiary Ledger – The subsidiary ledger containing the individual
accounts with customers.
• Controlling Account – The account in the general ledger that summarizes the balances of the
accounts in a subsidiary ledger.
• Credit Memorandum (Credit Memo) – A form used by a seller to inform the buyer of the
amount the seller proposes to credit to the account receivable due from the buyer.
• Credit Period -The amount of time the buyer is allowed in which to pay the seller.
• Credit Terms – Terms for payment on account by the buyer to the seller.
• Debit Memorandum (Debit Memo) – A form used by a buyer to inform the seller of the amount
the buyer proposes to debit to the account payable due the seller.
Chapter 5 Accounting for Merchandising Businesses 89
Relevant Example Exercises and Exhibits
• Example Exercise 5-2 Purchases Transactions
• Example Exercise 5-3 Sales Transactions
• Example Exercise 5-4 Freight Terms
• Example Exercise 5-5 Transactions for Buyer and Seller
• Exhibit 2 – Invoice
• Exhibit 3 – Credit Terms
• Exhibit 9 – Chart of Accounts for NetSolutions, a Merchandising Business
SUGGESTED APPROACH
This objective demonstrates to the student that merchandising businesses engage in purchasing and selling
of merchandise inventory. First the purchase of inventory is demonstrated using the perpetual method of
accounting for inventory. Note the periodic method is demonstrated in the appendix to the chapter.
The second part of this objective covers the entries to record sales in a perpetual inventory system. Begin
by stressing that selling merchandise to a customer requires two entries—one to record the sales revenue
and another to record the cost of merchandise sold and remove the item sold from merchandise inventory.
DEMONSTRATION PROBLEM—Entries for Merchandise Purchases
Purchases of merchandise for resale to a customer are recorded in the merchandise inventory account. Point
out that this account is an asset. Therefore, it is debited whenever inventory is increased and credited
whenever inventory is decreased.
TM 5-18 lists purchase-related transactions for S & V Office Supply Company. Read the first transaction
to your students and ask them to journalize it in their notes. After giving them a minute to work, show them
the correct journal entry. Proceed with the other transactions listed on the TM. The correct journal entries
TMs 5-11 and 5-12 present a matrix that explains the new accounts related to sales. Review these
TMs 5-13 and 5-14 list several sales-related transactions for S & V Office Supply Company. One method
to present this material is to give the students examples of the entries to record the sale of inventory items
in lecture format. Another is to allow students to decipher the entries on their own. Try reading the first
transaction to your students and ask them to journalize it in their notes. After giving them a minute to work,
WRITING EXERCISE—Recording Merchandise Sales
To emphasize some of the operational considerations in recording sales, ask your students to write answers
to one or more of the following questions (TM 5-17).
1. Why would a retailer offer customers a discount for timely payment?
2. If you owned a merchandising business, how would you decide which credit cards, if any, to accept?
3. Which of the following credit terms would be more generous to your customers: n/30 or n/eom?
Possible responses: 1) Retailers offer discounts to customers to encourage them to pay early to improve
cash flow. 2) A large expense for merchandisers is credit card fees. These costs would come into the
LECTURE AID—Discounts
For many students, a 2 percent discount doesn’t sound very impressive. They may need a little help
understanding the true financial impact of taking discounts on purchases. The following questions will
stress the savings of taking discounts:
1. What are the net savings from borrowing at a 12 percent interest rate in order to take the discount on a
$10,000 purchase, terms 1/10, n/30? Answer: $34 (which is $100 – [$9,900 20/360 12%]).
2. What is the interest rate earned on taking a discount with terms 3/15, n/60? Answer: 24 percent
(which is 3% 360/(60 – 15)).
LECTURE AID—Transportation Costs on Sales
Chapter 5 Accounting for Merchandising Businesses 91
Accounts Receivable………… 250
Sales…………………. 250
Cost of Merchandise Sold…… 100
Merchandise Inventory 100
Delivery Expense………….. 25
Cash…………………. 25
FOB (free on board) terms identify (1) when legal title to goods passes from seller to buyer and (2) who is
responsible for paying transportation costs. TM 5-20 lists the operational implications of FOB terms.
Notice that TM 5-20 points out that the buyer bears the risk of loss during transportation when merchandise
is shipped FOB shipping point. Therefore, the buyer should make sure that the merchandise is insured
against loss during shipment.
DEMONSTRATION PROBLEM—Transportation Costs on Purchases
Ask your students to record the transactions related to the purchase of merchandise and transportation costs
on TM 5-22. The correct entries are listed on TM 5-23.
TEACHING SUGGESTION—Chart of Accounts, Trade Discounts, and Sales
Tax
Chart of Accounts: After explaining the text’s system, it is interesting to point out the variety in charts of
accounts and their numbering systems by providing some real-world examples. Ask students to bring in
copies of charts of accounts for merchandising businesses. Students may have access to charts of accounts
92 Chapter 5 Accounting for Merchandising Businesses
Under the three-digit chart of accounts, the first digit represents the account classification (1 for assets, 2
for liabilities, etc.). The second digit represents the sub classification (11 for current assets and 21 for current
liabilities). The third digit identifies the specific account.
Trade Discounts: To introduce trade discounts to your students, you need only to define the term and give
a quick example. A trade discount is a discount off the normal (or list) price of merchandise given to a
certain class of buyers, such as customers buying wholesale, not-for-profits, or governmental agencies, etc.
OBJECTIVE 3
Describe and illustrate the financial statements of a merchandising business.
SYNOPSIS
Merchandising businesses have a few unique items in their financial statements. First, let’s take a look at
the multiple-step income statement shown in Exhibit 10. The first section shows sales. The cost of
merchandise sold is subtracted from sales to calculate gross profit. The operating expense section is divided
in two parts: selling expenses and administrative expenses. The total expenses are subtracted from gross
profit to calculate income from operations, and then there is a small section for other income and expenses
Key Terms and Definitions
• Account Form – The form of balance sheet that resembles the basic format of the accounting
equation, with assets on the left side and Liabilities and Stockholders’ Equity sections on the right
side.
• Administrative Expenses (General Expenses) – Expenses incurred in the administration or
general operations of the business.
Chapter 5 Accounting for Merchandising Businesses 93
• Income from Operations (Operating Income) – Revenues less operating expenses and service
department charges for a profit or an investment center.
• Multiple-Step Income Statement – A form of income statement that contains several sections,
subsections, and subtotals.
• Other Expense – Expenses that cannot be traced directly to operations.
• Other Income – Revenue from sources other than the primary operating activity of a business.
Relevant Example Exercises and Exhibits
• Exhibit 10 – Multiple-Step Income Statement
• Exhibit 11 – Single-Step Income Statement
• Exhibit 12 – Retained Earnings Statement for Merchandising Business
• Exhibit 13 – Report Form of Balance Sheet
SUGGESTED APPROACH
This objective introduces the multiple-step income statement. This income statement format contains
various sections, subsections, and subtotals, which increase the length and complexity of the income
statement. Point out that the benefit of this more detailed format is greater flexibility in analyzing a
company’s performance. For example, the gross profit percentage (gross profit divided by sales) is used to
analyze the mark-up above cost charged by retailers.
GROUP LEARNING ACTIVITY—Multiple-Step Income Statement
Before digging into the multiple-step income statement, you will need to define the new terms for your
students.
94 Chapter 5 Accounting for Merchandising Businesses
Sales: The total amount charged customers for merchandise sold. (This is a revenue account.)
Cost of Merchandise Sold: The cost to purchase the inventory being sold.
Gross Profit: Proceeds available to cover remaining expenses and net income.
Selling Expenses: Costs directly incurred in selling the merchandise, such as the cost of advertising or
You may want to demonstrate how intuitive the calculations are on the income statement by asking the
following question:
Assume a retailer sold $100 in merchandise to a customer on account. That customer returned $10 of the
merchandise. The customer also paid for the remaining merchandise early, entitling her to a $5 discount.
What amount of revenue was really earned on the sale? (Answer: $100 – $10 – $5 = $85 sales)
TM 5-2 lists an adjusted trial balance for Gem City Music, Inc. Divide students into small groups and ask
them to prepare an income statement for this retailer. A completed income statement is shown on TM 5-3.
GROUP LEARNING ACTIVITY—Retained Earnings Statement and Balance
Sheet
This learning objective contrasts the account form of balance sheet (assets on the left-hand side and
liabilities and stockholders’ equity on the right-hand side) with the report form (assets at the top of the page
with liabilities and stockholders’ equity at the bottom). The report form is illustrated in Exhibit 13 in this
chapter. An account form of balance sheet can be found in Chapter 4. A quick reference to these illustrations
Chapter 5 Accounting for Merchandising Businesses 95
OBJECTIVE 4
Describe the adjusting and closing process for a merchandising business.
SYNOPSIS
Using the perpetual inventory system, the inventory account is constantly updated. This means the amount
in the inventory account should be equal to the amount of merchandise available for sale at any point in
time. However, retailers often experience loss from shoplifting, employee theft, or errors, and this causes
discrepancies between the inventory account and the merchandise actually available for sale. The physical
Closing entries are similar to a service business. Temporary accounts are closed to Income Summary,
Income Summary is closed to the retained earnings account, and the dividends account is closed to the
retained earnings account. After the closing entries and post-closing trial balance are prepared, only
permanent accounts are shown on the post-closing trial balance.
Key Terms and Definitions
• Inventory Shrinkage (Inventory Shortage) – The amount by which the merchandise for sale, as
indicated by the balance of the merchandise inventory account, is larger than the total amount of
merchandise counted during the physical inventory.
Relevant Example Exercises and Exhibits
• Example Exercise 5-6 Inventory Shrinkage
SUGGESTED APPROACH
This objective introduces the adjusting entry for inventory shrinkage. Remind students that merchandisers
also record any of the adjusting entries introduced in Chapter 3 that are applicable (for example, supplies
used, insurance expired, wages owed to employees, fees earned, etc.). It also discusses closing entries; point
out to students that closing entries for a merchandising business are similar to those for a service business.
Discuss the new merchandising accounts that are added as part of the closing process. Cost of merchandise
sold is an all new merchandising account that gets closed along with the already familiar expense accounts.
The revenue account for merchandising business is the Sales account and requires a debit entry to close the
account.
96 Chapter 5 Accounting for Merchandising Businesses
separate expense account, but they still increase Cost of Merchandise Sold. Physical inventory and book
inventory must agree at the end of the period.
LECTURE AID—Adjusting Entry for Inventory Shrinkage
Unfortunately, inventory shrinkage is considered a normal cost of operations for a retailer. Theft of
inventory (shoplifting), damaged inventory, and mistakes in recording inventory can never be totally
eliminated. Therefore, the inventory account must be adjusted prior to preparing financial statements. Any
shrinkage is recorded as an expense.
For example, assume a company’s perpetual inventory records show that there should be $89,500 of
inventory on hand. (Emphasize that the perpetual records show what should be in inventory based on
merchandise purchased and sold during the year.) However, a physical inventory count reveals that only
LECTURE AID—Closing Process for Merchandising Business
The process of closing entries has not changed from Chapter 4; there are simply more accounts to close. In
a perpetual inventory system, the cost of merchandise sold account is closed to Income Summary, along
with the other expense accounts shown in the Income Statement column of the end-of-period spreadsheet
(work sheet).
GROUP LEARNING ACTIVITY—Closing Entries for a Merchandiser
TM 5-25 reviews the basics of the closing process. Remind students that closing entries can be taken directly
from the Income Statement columns of the end-of-period spreadsheet (work sheet). Also stress that the
OBJECTIVE 5
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• Ratio of Sales to Assets – Ratio that measures how effectively a company uses its assets,
computed as sales divided by average total assets.
Relevant Example Exercises and Exhibits
• Example Exercise 5-7 Ratio of Sales to Assets
SUGGESTED APPROACH
Explain to students that the assets of a company are “used up” as a normal part of conducting business.
How efficiently a company uses those assets to generate sales is another good indicator of the company’s
operating performance. As the text indicates, the value of the assets used to compute the ratio may be the
total assets at the end of the year, the average between the beginning and the end of the year, or the average
of the monthly assets.
APPENDIX—THE PERIODIC INVENTORY
SYSTEM
SYNOPSIS
The periodic inventory system may be used for businesses that use a manual accounting system. In the
periodic system, the cost of merchandise sold is determined at the end of the period. An example is shown
in Exhibit 14. Additional accounts used in this system are shown in the chart of accounts in Exhibit 15.
Relevant Example Exercises and Exhibits
• Exhibit 15 – Chart of Accounts Under the Periodic Inventory System
• Exhibit 16 – Transactions Using the Periodic and Perpetual Inventory Systems
SUGGESTED APPROACH
Some businesses may still use a periodic inventory system, and this appendix points out the differences in
the two systems. Point out Exhibit 14 in the text, and emphasize the difference in accounts and timing of
Problems 5-8A or 5-8B in the textbook can be used to demonstrate the entries and differences between the
two inventory methods.
LECTURE AID—Calculating Cost of Merchandise Sold Using the Periodic
Inventory System
This objective presents a brief comparison of the perpetual and periodic inventory systems. TMs 5–6
through 5-8 contrast the two inventory systems, show the costs and benefits of a perpetual inventory system,
and offer insight on how businesses choose an inventory system. To illustrate the essence of a perpetual
inventory system, relate it to a checkbook. Maintaining a checkbook register for a bank account is a type
of perpetual inventory system. By tracking increases (deposits) and decreases (withdrawals or checks
written) in the checkbook register, you can keep a running balance of your cash.
A merchandiser who uses the periodic inventory system must compute the Cost of Merchandise Sold when
preparing an income statement. This calculation is based on the amount of inventory purchased and the
amount in inventory at the beginning and the end of the period. The following story will illustrate this
calculation.
Chapter 5 Accounting for Merchandising Businesses 99
This is essentially the calculation of Cost of Merchandise Sold under a periodic inventory system:
Merchandise Inventory on hand at the beginning of the year
When purchasing merchandise inventory, a business may be required to pay transportation costs to have
the merchandise delivered from the supplier. The purchaser may also receive early payment discounts or
make returns of unwanted merchandise. Therefore, the Cost of Merchandise Purchased must be calculated
as follows:
Purchases
Handout 5-1
A
B
C
D
E
F
G
H
I
J
K
1
Gem City Music, Inc.
2
End-of-Period Spreadsheet (Work Sheet)
3
For the Year Ended December 31, 20—
4
Unadjusted
Adjusted
Income
Balance
5
Trial Balance
Adjustments
Trial Balance
Statement
Sheet
6
Account Title
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash
Accounts Receivable
15,800
Merchandise Inventory
9,600
10
Office Equipment
23,000
11
Acc. Depr.—Off.
Equip.
6,400
2,800
9,200
9,200
12
Accounts Payable
16,000
16,000
16,000
13
Salaries Payable
1,250
1,250
1,250
14
Common Stock
9,000
9,000
9,000
15
Retained Earnings
2,500
2,500
2,500
16
Dividends
12,800
17
Sales
187,100
187,100
18
Cost of Merch. Sold
100,000
19
Rent Expense
7,800
20
Sales Salaries Exp.
21
Office Salaries Exp.
22
Equip.
23
Interest Expense
2,000
24
221,000
221,000
4,850
4,850
225,050
225,050
152,850
187,100
72,200
37,950
25
Net Income
34,250
34,250
26
187,100
187,100
195,700
72,200
72,200
27
28
29
Type Item Description LO(s) Difficulty Time Est BUSPROG AICPA ACBSP – APC Bloom’s EE Excel GL SMH FAI Service Real World Writing Ethics Internet Group
DQ 1 1 Easy 5 min. Analytic Measurement Purpose Knowledge
DQ 2 1 Easy 5 min. Analytic Measurement Financial Statements Knowledge
DQ 3 3 Easy 5 min. Analytic Measurement Purc Knowledge
DQ 4 3 Easy 5 min. Analytic Measurement Receivables Reporting Knowledge
DQ 5 3 Easy 5 min. Analytic Measurement Receivables Reporting Knowledge
DQ 6 2 Easy 5 min. Analytic Measurement Receivables Reporting Knowledge
DQ 7 2 Easy 5 min. Analytic Measurement Inventories Reporting Knowledge
DQ 8 2 Easy 5 min. Analytic Measurement Inventories Reporting Application
PE 6A Inventory shrinkage 4 Easy 5 min. Analytic Measurement Inventories Reporting Application x
PE 6B Inventory shrinkage 4 Easy 5 min. Analytic Measurement Inventories Reporting Application x
PE 7A Ratio of sales to assets 5 Moderate 10 min. Analytic Measurement Financial Statement Analysis Application x x x
PE 7B Ratio of sales to assets 5 Moderate 10 min. Analytic Measurement Financial Statement Analysis Application x x x
EX 12 Sales-related transactions 2 Easy 10 min. Analytic Measurement Inventories Reporting Application x
EX 13 Determining amounts to be paid on invoices 2 Moderate 15 min. Analytic Measurement Inventories Reporting Application x
EX 14 Sales-related transactions 2 Easy 10 min. Analytic Measurement Inventories Reporting Application x
EX 15 Purchase-related transactions 2 Easy 10 min. Analytic Measurement Inventories Reporting Application x
EX 16 Chart of accounts 2 Easy 20 min. Analytic Measurement Purpose Knowledge
EX 17 Sales tax 2 Easy 10 min. Analytic Measurement Inventories Reporting Application x
EX 18 Sales tax transactions 2 Easy 10 min. Analytic Measurement Inventories Reporting Application x
EX 19 Normal balances of merchandise accounts 2 Easy 5 min. Analytic Measurement Inventories Reporting Application
EX 20 Income statement and accounts for merchandiser 3 Easy 5 min. Analytic Measurement Inventories Reporting Application x
EX 21 Income statement for merchandiser 3 Easy 5 min. Analytic Measurement Inventories Reporting Knowledge
EX 22 Determining amounts for items omitted from income statement 3 Moderate 15 min. Analytic Measurement Inventories Reporting Application x
EX 23 Multiple-step income statement 3 Moderate 30 min. Analytic Measurement Inventories Reporting Application x x x
EX 24 Multiple-step income statement 3 Moderate 15 min. Analytic Measurement Financial Statements Application
EX 25 Single-step income statement 3 Easy 10 min. Analytic Measurement Financial Statements Application x
EX 26 Adjusting entry for merchandise inventory shrinkage 4 Easy 5 min. Analytic Measurement Inventories Reporting Application x
EX 27 Closing the accounts of a merchandiser 4 Easy 5 min. Analytic Measurement Inventories Reporting Application
EX 28 Closing entries; net income 4 Easy 10 min. Analytic Measurement Inventories Reporting Application
EX 29 Closing entries 4 Moderate 20 min. Analytic Measurement Closing Entries Application
PR 3A Sales-related and purchase-related transactions using perpetual inventory system 2 Challenging 1.5 hours Analytic Measurement Recording Transactions Application x x
PR 4A Sales-related and purchase-related transactions for seller and buyer using perpetual inventory system 2 Challenging 2 hours Analytic Measurement Recording Transactions Application
PR 5A Multiple-step income statement and report form of balance sheet 3 Moderate 1.5 hours Analytic Measurement Financial Statements Application x x x
PR 6A Single-step income statement and account form of balance sheet 3 Moderate 1 hour Analytic Measurement Financial Statements Application x
PR 7A Purchase-related transactions using periodic inventory system Appendix Moderate 45 min. Analytic Measurement Recording Transactions Application
PR 8A Sales-related and purchase-related transactions using periodic inventory system Appendix Challenging 1.5 hours Analytic Measurement Recording Transactions Application
PR 9A Sales-related and purchase-related transactions for buyer and seller using periodic inventory system Appendix Challenging 2 hours Analytic Measurement Recording Transactions Application
PR 10A Periodic inventory accounts, multiple-step income statement, closing entries Appendix Challenging 2 hours Analytic Measurement Inventories Reporting Application x x
PR 1B Purchase-related transactions using perpetual inventory system 2 Moderate 45 min. Analytic Measurement Recording Transactions Application x
PR 2B Sales-related transactions using perpetual inventory system 2 Moderate 45 min. Analytic Measurement Recording Transactions Application x x x
PR 3B Sales-related and purchase-related transactions using perpetual inventory system 2 Challenging 1.5 hours Analytic Measurement Recording Transactions Application x x
PR 4B Sales-related and purchase-related transactions for seller and buyer using perpetual inventory system 2 Challenging 2 hours Analytic Measurement Recording Transactions Application
PR 5B Multiple-step income statement and report form of balance sheet 3 Moderate 1.5 hours Analytic Measurement Financial Statements Application x x x
PR 6B Single-step income statement and account form of balance sheet 3 Moderate 1 hour Analytic Measurement Financial Statements Application x
PR 7B Purchase-related transactions using periodic inventory system Appendix Moderate 45 min. Analytic Measurement Recording Transactions Application
PR 8B Sales-related and purchase-related transactions using periodic inventory system Appendix Challenging 1.5 hours Analytic Measurement Recording Transactions Application
PR 9B Sales-related and purchase-related transactions for buyer and seller using periodic inventory system Appendix Challenging 2 hours Analytic Measurement Recording Transactions Application
PR 10B Periodic inventory accounts, multiple-step income statement, closing entries Appendix Challenging 2 hours Analytic Measurement Inventories Reporting Application x x
Continuing Problem Challenging 3 hours Analytic Measurement Recording Transactions Application
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