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CHAPTER 5
SOLUTIONS TO PROBLEMS: SET B
PROBLEM 5-1B
(a) July 1 Inventory ....................................................... 1,800
Accounts Payable ................................. 1,800
9 Accounts Payable ......................................... 1,800
Inventory
($1,800 X .02) ..................................... 36
Cash ....................................................... 1,764
12 Cash .............................................................. 1,980
Sales Discounts ............................................ 20
Accounts Receivable ............................ 2,000
18 Inventory ....................................................... 1,900
Accounts Payable ................................. 1,900
Inventory ....................................................... 125
Cash ....................................................... 125
PROBLEM 5-1B (Continued)
July 22 Accounts Receivable .................................... 2,250
Sales Revenue ....................................... 2,250
31 Sales Returns and Allowances ..................... 200
Accounts Receivable ............................ 200
PROBLEM 5-2B
(a)
General Journal J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
Apr. 2
Inventory .............................................
Accounts Payable .......................
120
201
6,900
6,900
4
Accounts Receivable .........................
Sales Revenue ............................
Cost of Goods Sold ............................
Inventory .....................................
112
401
505
120
6,500
3,900
6,500
3,900
11
Accounts Payable ($6,900 – $500) ......
Inventory .....................................
($6,400 X 1%)
Cash ............................................
201
120
101
6,400
64
6,336
13
Cash ....................................................
Sales Discounts ($6,500 X 1%) ..........
Accounts Receivable .................
101
414
112
6,435
65
6,500
18
Inventory .............................................
Accounts Payable .......................
120
201
4,500
4,500
20
Inventory .............................................
Cash ............................................
120
101
100
100
PROBLEM 5-2B (Continued)
General Journal J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
Apr. 23
Cash ....................................................
Sales Revenue ............................
Cost of Goods Sold ............................
Inventory .....................................
101
401
505
120
7,400
4,120
7,400
4,120
29
Sales Returns and Allowances ..........
Cash .............................................
Inventory .............................................
Cost of Goods Sold ....................
412
101
120
505
90
30
90
30
PROBLEM 5-2B (Continued)
(b)
Cash No. 101
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 1
5
11
13
14
Balance
J1
J1
J1
J1
6,435
240
6,336
3,800
9,000
8,760
2,424
8,859
5,059
Accounts Receivable No. 112
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 4
J1
6,500
6,500
Inventory No. 120
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 2
4
6
11
J1
J1
J1
J1
6,900
3,900
500
64
6,900
3,000
2,500
2,436
PROBLEM 5-2B (Continued)
Accounts Payable No. 201
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 2
6
J1
J1
500
6,900
6,900
6,400
Owner’s Capital No. 301
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 1
Balance
9,000
Sales No. 401
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 4
J1
6,500
6,500
Sales Returns and Allowances No. 412
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 29
J1
90
90
Sales Discounts No. 414
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 13
J1
65
65
Cost of Goods Sold No. 505
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 4
J1
3,900
3,900
PROBLEM 5-2B (Continued)
Freight-Out No. 644
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 5
J1
240
240
(c) ROSE DISTRIBUTING COMPANY
Income Statement (Partial)
For the Month Ended April 30, 2017
Sales
Sales revenue ..................................................... $17,600
PROBLEM 5-3B
(a) MACKEY DEPARTMENT STORE
Income Statement
For the Year Ended December 31, 2017
Sales
Sales revenue .................................... $728,000
Less: Sales returns and
Cost of goods sold ................................... 412,700
Gross profit ............................................... 307,300
Operating expenses
Salaries and wages expense ..... $108,000
Depreciation expense ................. 23,700
Income from operations ........................... 137,100
Other revenues and gains
Interest revenue ................................. 4,000
Other expenses and losses
PROBLEM 5-3B (Continued)
MACKEY DEPARTMENT STORE
Owner’s Equity Statement
For the Year Ended December 31, 2017
Owner’s Capital, January 1 ........................................................... $176,600
MACKEY DEPARTMENT STORE
Balance Sheet
December 31, 2017
Assets
Current assets
Cash ..................................................... $ 23,800
Accounts receivable ........................... 50,300
Property, plant, and equipment
Buildings ............................................. $290,000
Less: Accumulated depreciation—
buildings .................................. 52,500 237,500
PROBLEM 5-3B (Continued)
MACKEY DEPARTMENT STORE
Balance Sheet (Continued)
December 31, 2017
Liabilities and Owner’s Equity
Current liabilities
Accounts payable .................................................... $ 80,300
Mortgage payable (due next year) .......................... 25,000
Total current liabilities ..................................... $123,400
Long-term liabilities
Mortgage payable .................................................... 55,000
(b) Dec. 31 Depreciation Expense ............................. 23,700
Accumulated Depreciation—
Buildings ....................................... 10,400
31 Insurance Expense .................................. 7,200
Prepaid Insurance ............................ 7,200
PROBLEM 5-3B (Continued)
31 Sales Commissions Expense ............... 4,300
Sales Commissions Payable ......... 4,300
(c) Dec. 31 Sales Revenue ....................................... 728,000
Interest Revenue .................................... 4,000
Income Summary ........................... 732,000
31 Income Summary ................................... 602,900
Sales Returns and Allowances ....... 8,000
31 Income Summary ................................... 129,100
Owner’s Capital .............................. 129,100
PROBLEM 5-4B
(a)
General Journal J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
Apr. 4
Inventory ...............................................
Accounts Payable .........................
120
201
840
840
Cost of Goods Sold ..............................
Inventory .......................................
505
120
790
790
13
Accounts Payable ($840 – $40) ...........
Inventory .......................................
($800 X 2%)
Cash...............................................
201
120
101
800
16
784
14
Inventory ...............................................
Accounts Payable .........................
120
201
900
900
15
Cash ......................................................
Inventory .......................................
101
120
50
50
PROBLEM 5-4B (Continued)
General Journal J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
Apr. 20
Cash .....................................................
Accounts Receivable ...................
101
112
600
600
(b)
Cash No. 101
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 1
6
11
13
Balance
J1
J1
J1
40
420
784
2,500
2,460
2,040
1,256
Accounts Receivable No. 112
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 8
18
J1
J1
1,150
900
1,150
2,050
PROBLEM 5-4B (Continued)
Inventory No. 120
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 1
4
6
8
Balance
J1
J1
J1
840
40
790
1,700
2,540
2,580
1,790
Accounts Payable No. 201
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 4
J1
840
840
Owner’s Capital No. 301
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 1
Balance
4,200
Sales Revenue No. 401
Date
Explanation
Ref.
Debit
Credit
Balance
PROBLEM 5-4B (Continued)
Sales Returns and Allowances No. 412
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 27
J1
40
40
Cost of Goods Sold No. 505
Date
Explanation
Ref.
Debit
Credit
Balance
(c) DIAZ TENNIS SHOP
Trial Balance
April 30, 2017
Debit
Credit
Cash ........................................................................
Accounts Receivable .............................................
Inventory .................................................................
$1,713
700
2,467
*PROBLEM 5-5B
ROSHEK DEPARTMENT STORE
Income Statement (Partial)
For the Year Ended December 31, 2017
Sales
Sales revenue .......................... $725,000
Less: Sales returns and
Cost of goods sold
Inventory, January 1 ................ $ 40,500
Purchases ................................ $447,000
Less: Purchase returns
and allowances ............. $ 6,400
*PROBLEM 5-6B
(a)
2015
2016
2017
Cost of goods sold:
Beginning inventory
$ 13,000
$ 11,300
$ 14,700
(b)
2015
2016
2017
Sales revenue
$239,000
$237,000
$235,000
(c)
2015
2016
2017
Beginning accounts payable
$ 20,000
$ 31,000
$ 15,000
(d) Gross profit rate 138.2% 240.3% 344.0%
No. Even though sales declined in 2017 from each of the two prior years,
the gross profit rate increased. This means that cost of goods sold
*PROBLEM 5-7B
(a)
General Journal
Date
Account Titles and Explanation
Debit
Credit
Apr. 4
Purchases ........................................................
Accounts Payable ....................................
740
740
10
Accounts Payable ............................................
Purchase Returns and Allowances .........
40
40
11
Purchases ........................................................
Cash ..........................................................
300
300
14
Purchases ........................................................
Accounts Payable ....................................
700
700
18
Accounts Receivable.......................................
Sales Revenue ..........................................
1,000
1,000
20
Cash .................................................................
Accounts Receivable ...............................
500
500
*PROBLEM 5-7B (Continued)
Date
Account Titles and Explanation
Debit
Credit
Apr. 27
Sales Returns and Allowances .....................
Accounts Receivable .............................
25
25
(b)
Cash
Accounts Payable
4/1 Bal. 2,500
4/15 50
4/6 60
4/11 300
4/10 40
4/13 700
4/4 740
4/14 700
4/1 Bal. 4,200
Accounts Receivable
4/30 Bal. 4,200
4/8 900
4/18 1,000
4/20 500
4/27 25
Sales Revenue
Inventory
4/1 Bal. 1,700
Purchase Discounts
4/30 Bal. 1,700
4/13 21
4/21 14
Sales Returns and Allowances
4/30 Bal. 35
4/27 25
Purchase
Returns and Allowances
4/10 40
*PROBLEM 5-7B (Continued)
(c) EVERETT TENNIS SHOP
Trial Balance
April 30, 2017
Debit
Credit
Cash ........................................................................
Accounts Receivable .............................................
Inventory ................................................................
$1,845
825
1,700
EVERETT TENNIS SHOP
Income Statement (Partial)
For the Month Ended April 30, 2017
Sales
Sales revenue ............................. $1,900
Less: Sales returns and
allowances ....................... 25
Less: Purchase returns
and allowances ................ $90
Purchase discounts ........ 35 125
