CHAPTER 6 Accounting for Merchandising Businesses
Prob. 6–10B
1. Periodic inventory system. Simkins Company uses a periodic inventory
system because it maintains accounts for purchases, purchases returns and
allowances, purchases discounts, and freight in.
2. See page 6-63.
6-61
CHAPTER 6 Accounting for Merchandising Businesses
Prob. 6–10B (Continued)
2.
Sales $6,590,000
June 30, 2016
Cost of merchandise sold 4,007,000
Gross profit $2,583,000
Expenses:
Selling expenses:
Office supplies expense 5,000
Depreciation expense—office equipment 4,000
Miscellaneous administrative expense 16,000
Total administrative expenses 460,000
Total operating expenses 1,413,000
SIMKINS COMPANY
Income Statement
For the Year Ended June 30, 2016
6-62
CHAPTER 6 Accounting for Merchandising Businesses
Prob. 6–10B (Concluded)
3.
Merchandise Inventory 508,000
Sales 6,590,000
Purchases Returns and Allowances 32,000
Purchases Discounts 13,000
Income Summary 5,975,500
Merchandise Inventory 415,000
Purchases 4,100,000
Freight In 45,000
Sales Salaries Expense 580,000
Advertising Expense 315,000
Income Summary 1,200,000
Amy Gant, Capital 1,200,000
Closing Entries
6-63
CHAPTER 6 Accounting for Merchandising Businesses
1., 2., 6., and 9.
Account No. 110
Post.
Item Ref. Debit Credit Debit Credit
2016
20 20 13,230
21 21 2,300
Account No. 112
Post.
Item Ref. Debit Credit Debit Credit
2016
May 1 Balance 233,900
6 20 67,130
20 21 108,900
21 21 2,300
COMPREHENSIVE PROBLEM 2
Account: Accounts Receivable
Balance
Date
Date
Balance
Cash
Account:
6-64
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
Account No.
115
Post.
Item Ref. Debit Credit Debit Credit
2016
May 1 Balance 624,400
3 20 35,280
20 20 8,000
20 21 70,000
Account No.
116
Post.
Item Ref. Debit Credit Debit Credit
2016
May 1 Balance 28,000
Account No.
117
Post.
Item Ref. Debit Credit Debit Credit
2016
May 1 Balance 16,800
31 Adjusting 22 12,000 4,800
Account No.
118
Post.
Item Ref. Debit Credit Debit Credit
Account:
Merchandise Inventory
Balance
Date
Account:
Prepaid Insurance
Balance
Date
Account:
Store Supplies
Balance
Date
Account:
Estimated Returns Inventory
Balance
Date
6-65
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
Account No. 123
Post.
Item Ref. Debit Credit Debit Credit
2016
May 1 Balance 569,500
Account No. 124
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No. 210
Post.
Item Ref. Debit Credit Debit Credit
2016
May 1 Balance 96,600
3 20 35,280
Account No. 211
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No. 212
Post.
Item Ref. Debit Credit Debit Credit
2016
May 1 Balance 50,000
Account: Salaries Payable
Balance
Balance
Date
Balance
Date
Account: Store Equipment
Account: Customers Refunds Payable
Date
Account: Accumulated Depreciation—Store Equipment
Balance
Date
Account: Accounts Payable
Balance
Date
6-66
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
Account No.
310
Post.
Item Ref. Debit Credit Debit Credit
2015
June 1 Balance 685,300
Account No.
311
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No.
312
Post.
Item Ref. Debit Credit Debit Credit
2016
May 31 Closing 23 5,316,205
10 20 54,000
20 21 108,900
30 21 77,175 5,376,205
31 Adjusting 22 60,000 5,316,205
Account:
Income Summary
Balance
Date
Balance
Date
Account:
Lynn Tolley, Capital
Balance
Date
Account:
Lynn Tolley, Drawing
6-67
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
Account No. 510
Post.
Item Ref. Debit Credit Debit Credit
2016
May 1 Balance 2,823,000
6 20 41,000
10 20 32,000
Account No. 520
Post.
Item Ref. Debit Credit Debit Credit
2016
May 1 Balance 664,800
Account No. 521
Post.
Item Ref. Debit Credit Debit Credit
2016
May 1 Balance 281,000
Account No. 522
Post.
Item Ref. Debit Credit Debit Credit
2016
Account: Depreciation Expense
Balance
Date
Balance
Date
Account: Advertising Expense
Balance
Date
Account: Cost of Merchandise Sold
Balance
Date
Account: Sales Salaries Expense
6-68
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
Account No. 523
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No. 529
Post.
Item Ref. Debit Credit Debit Credit
2016
May 1 Balance 12,600
Account No. 530
Post.
Item Ref. Debit Credit Debit Credit
2016
May 1 Balance 382,100
Account No. 531
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No. 532
Post.
Item Ref. Debit Credit Debit Credit
2016
May 31 Adjusting 22 12,000 12,000
Balance
Date
Account: Rent Expense
Balance
Date
Account: Insurance Expense
Account: Stores Supplies Expense
Balance
Date
Account: Miscellaneous Selling Expense
Balance
Date
Account: Office Salaries Expense
Balance
Date
6-69
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
Account No. 539
Post.
Item Ref. Debit Credit Debit Credit
2016
Account: Miscellaneous Administrative Expense
Balance
Date
6-70
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
1. and 2.
Page
20
Post.
Ref. Debit Credit
2016
May 1 Rent Expense 531 5,000
Cash 110 5,000
3 Merchandise Inventory 115 35,280
6 Cost of Merchandise Sold 510 41,000
Merchandise Inventory 115 41,000
7 Cash 110 22,300
Accounts Receivable—Halstad Co. 112 22,300
10 Cash 110 54,000
Sales 410 54,000
19 Accounts Payable—Buttons Co. 210 33,450
Cash 110 33,450
20 Customers Refunds Payable 212 13,230
Cash 110 13,230
[$13,500 – ($13,500 × 2%)]
Date
JOURNAL
6-71
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
Page
21
Post.
Ref. Debit Credit
2016
May 20 Accounts Receivable—Crescent Co. 112 108,900
21 Cash 110 42,900
Accounts Receivable—Gee Co. 112 42,900
21 Merchandise Inventory 115 87,120
Accounts Payable—Osterman Co. 210 87,120
[$88,000 – ($88,000 × 1%)]
24 Accounts Payable—Osterman Co. 210 4,950
30 Accounts Receivable—Turner Co. 112 77,175
Sales 410 77,175
[$78,750 – (78,750 × 2%)]
30 Cost of Merchandise Sold 510 47,000
Merchandise Inventory 115 47,000
6-72
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
3.
Debit Credit
Balances Balances
Cash 84,500
Accounts Receivable 245,875
Accumulated Depreciation—Store Equipment 56,700
Accounts Payable 63,150
Salaries Payable —
Customers Refunds Payable 29,270
Lynn Tolley, Capital 685,300
Lynn Tolley, Drawing 135,000
Sales 5,376,205
May 31, 2016
PALISADE CREEK CO.
Unadjusted Trial Balance
6-73