CHAPTER 6 Accounting for Merchandising Businesses
Prob. 6-2B
July 1 Accounts Receivable—Landscapes Co. 33,450
Sales 33,450
1 Cost of Merchandise Sold 20,000
Merchandise Inventory 20,000
5 Accounts Receivable—Peacock Company 17,325
Sales 17,325
[$17,500 – ($17,500 × 1%)]
8 Cost of Merchandise Sold 67,200
Merchandise Inventory 67,200
13 Cash 96,000
Sales 96,000
13 Cost of Merchandise Sold 57,600
Merchandise Inventory 57,600
CHAPTER 6 Accounting for Merchandising Businesses
Prob. 6-2B (Concluded)
July 16 Customer Refunds Payable 3,000
Accounts Receivable—Loeb Co. 3,000
18 Cost of Merchandise Sold 6,800
Merchandise Inventory 6,800
24 Cash ($15,840 – $3,000) 12,840
Accounts Receivable—Loeb Co. 12,840
28 Cash ($11,123 + $475) 11,598
Accounts Receivable—Jennings Company 11,598
CHAPTER 6 Accounting for Merchandising Businesses
Prob. 6-3B
July 3 Merchandise Inventory 61,426
Accounts Payable—Hamling Co. 61,426
[$72,000 – ($72,000 × 15%)] = $61,200
[$61,200 – ($61,200 × 2%)] + $1,450
6 Cost of Merchandise Sold 25,000
Merchandise Inventory 25,000
15 Accounts Payable—Kester Co. 26,068
Cash 26,068
($32,781 – $6,713)
21 Cash 36,000
Accounts Receivable—Parsley Co. 36,000
21 Cash 108,000
Sales 108,000
CHAPTER 6 Accounting for Merchandising Businesses
Prob. 6-3B (Concluded)
July 23 Cash 91,200
Sales 91,200
CHAPTER 6 Accounting for Merchandising Businesses
Prob. 6-4B
1.
Apr. 2 Accounts Receivable—Bird Company 31,360
Sales 31,360
[$32,000 – ($32,000 × 2%)]
2 Accounts Receivable—Bird Company 330
Cash 330
8 Cost of Merchandise Sold 29,700
Merchandise Inventory 29,700
8 Delivery Expense 710
Cash 710
Cash 2,000
23 Cash 49,005
Accounts Receivable—Bird Company 49,005
24 Accounts Receivable—Bird Company 67,350
Sales 67,350
CHAPTER 6 Accounting for Merchandising Businesses
Prob. 6-4B (Concluded)
2.
Apr. 2 Merchandise Inventory ($31,360 + $330) 31,690
Accounts Payable—Swan Company 31,690
18 Cash 2,000
Merchandise Inventory 2,000
23 Accounts Payable—Swan Company 49,005
Cash 49,005
24 Merchandise Inventory 67,350
Accounts Payable—Swan Company 67,350
CHAPTER 6 Accounting for Merchandising Businesses
Prob. 6-5B
1.
Sales $8,925,000
Cost of merchandise sold 5,620,000
Gross profit $3,305,000
Expenses:
Total selling expenses $1,321,000
Administrative expenses:
Office salaries expense $540,000
Rent expense 48,000
Insurance expense 24,000
Depreciation expense—office
equipment 10,000
2.
Gerri Faber, capital, July 1, 20Y4 $ 431,000
Kanpur Co.
Statement of Owner’s Equity
For the Year Ended June 30, 20Y5
Kanpur Co.
Income Statement
For the Year Ended June 30, 20Y5
CHAPTER 6 Accounting for Merchandising Businesses
Prob. 6-5B (Concluded)
3.
Current assets:
Cash $ 92,000
Accounts receivable 450,000
Property, plant, and equipment:
Office equipment $220,000
Less accumulated depreciation 58,000 $162,000
Store equipment $650,000
Less accumulated depreciation 87,500 562,500
Total property, plant, and equipment 724,500
Total assets $1,663,500
Current liabilities:
Accounts payable $ 38,500
Customer refunds payable 10,000
Salaries payable 4,000
Note payable (current portion) 7,000
Total current liabilities $ 59,500
4. The multiple-step form of income statement contains various sections for
revenues and expenses, with intermediate balances, and concludes with
net income. In the single-step form, the total of all expenses is deducted
from the total of all revenues. There are no intermediate balances.
Kanpur Co.
Balance Sheet
June 30, 20Y5
Assets
Liabilities
CHAPTER 6 Accounting for Merchandising Businesses
Prob. 6-6B
1.
Sales $8,925,000
Expenses:
Cost of merchandise sold $5,620,000
2. 20Y5
June 30 Sales 8,925,000
Cost of Merchandise Sold 5,620,000
Sales Salaries Expense 850,000
Advertising Expense 420,000
Depreciation Expense—Store Equipment 33,000
Miscellaneous Selling Expense 18,000
Office Salaries Expense 540,000
Kanpur Co.
Income Statement
For the Year Ended June 30, 20Y5
Closing Entries
CHAPTER 6 Accounting for Merchandising Businesses
Appendix 3 Prob. 6-7B
Mar. 1 Purchases 43,250
Freight In 650
Accounts Payable—Haas Co. 43,900
13 Purchases 15,550
Accounts Payable—Jost Co. 15,550
14 Accounts Payable—Jost Co. 3,750
Purchases Returns and Allowances 3,750
19 Purchases 6,500
Accounts Payable—Bickle Co. 6,500
23 Accounts Payable—Jost Co. 11,800
Cash 11,564
Purchases Discounts 236
CHAPTER 6 Accounting for Merchandising Businesses
Appendix 3 Prob. 6-8B
July 3 Purchases 61,200
Freight In 1,450
Accounts Payable—Hamling Co. 62,650
[$72,000 – ($72,000 × 15%)]
13 Accounts Payable—Hamling Co. 62,650
Cash 61,426
Purchases Discounts 1,224
15 Accounts Payable—Kester Co. 26,600
Cash 26,068
Purchases Discounts 532
22 Accounts Receivable—Tabor Co. 16,317
Sales 16,317
[$16,650 – ($16,650 × 2%)]
23 Cash 91,200
Sales 91,200
Appendix 3 Prob. 6-9B
1. Simkins Company uses a periodic inventory system because it maintains
accounts for purchases, purchases returns and allowances, purchases discounts,
and freight in.
CHAPTER 6 Accounting for Merchandising Businesses
Appendix 3 Prob. 6-9B (Continued)
2.
Sales $6,590,000
Cost of merchandise sold:
Merchandise inventory, July 1, 20Y8 $ 415,000
Cost of merchandise purchased:
Purchases $4,100,000
Purchases returns and allowances (32,000)
Cost of merchandise sold 3,974,000
Gross profit $2,616,000
Expenses:
Selling expenses:
Sales salaries expense $ 580,000
Administrative expenses:
Office salaries expense $ 375,000
Rent expense 43,000
Insurance expense 17,000
Office supplies expense 5,000
Depreciation expense—office equipment 4,000
Miscellaneous administrative expense 16,000
Total administrative expenses 460,000
Net income $1,233,000
Simkins Company
Income Statement
For the Year Ended June 30, 20Y9
CHAPTER 6 Accounting for Merchandising Businesses
Appendix 3 Prob. 6-9B (Concluded)
3.
June 30 Merchandise Inventory (June 30, 20Y9) 541,000
Sales 6,590,000
Purchases Returns and Allowances 32,000
Purchases Discounts 13,000
Rent Revenue 32,500
Merchandise Inventory (July 1, 20Y8) 415,000
Depreciation Expense—Store Equipment 12,000
Miscellaneous Selling Expense 28,000
Office Salaries Expense 375,000
Rent Expense 43,000
Insurance Expense 17,000
Office Supplies Expense 5,000
Depreciation Expense—Office Equipment 4,000
4. $1,233,000, the same net income as under the periodic inventory system
Closing Entries 20Y9
CHAPTER 6 Accounting for Merchandising Businesses
1., 2., 6., and 9.
Account No. 110
Post.
Item Ref. Debit Credit Debit Credit
20Y7
May 1 Balance 83,600
1 20 5,000
20 20 5,000
21 21 2,300
21 21 42,900
26 21 800
28 21 85,000
Account No. 112
Post.
Item Ref. Debit Credit Debit Credit
20Y7
May 1 Balance 233,900
6 20 67,130
7 20 22,300
COMPREHENSIVE PROBLEM 2
Account: Accounts Receivable
Balance
Date
Date
Balance
Cash
Account:
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Prob. 2 (Continued)
Account No. 115
Post.
Item Ref. Debit Credit Debit Credit
20Y7
May 1 Balance 652,400
3 20 35,280
4 20 600
6 20 41,000
10 20 32,000
Account No. 117
Post.
Item Ref. Debit Credit Debit Credit
20Y7
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
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Prob. 2 (Continued)
Account No. 123
Post.
Item Ref. Debit Credit Debit Credit
Account No. 124
Post.
Item Ref. Debit Credit Debit Credit
20Y7
May 1 Balance 56,700
31 Adjusting 22 14,000 70,700
Account No. 210
Post.
Item Ref. Debit Credit Debit Credit
Account No. 211
Post.
Item Ref. Debit Credit Debit Credit
20Y7
May 1 Balance 50,000
20 20 5,000
26 21 800 44,200
31 Adjusting 22 60,000 104,200
Account No. 212
Post.
Balance
Balance
Date
Balance
Date
Balance
Balance
Account: Store Equipment
Account: Customer Refunds Payable
Account: Accumulated Depreciation—Store Equipment
Date
Account: Accounts Payable
Date
Account: Salaries Payable
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Prob. 2 (Continued)
Account No.
310
Post.
Item Ref. Debit Credit Debit Credit
Account No.
311
Post.
Item Ref. Debit Credit Debit Credit
20Y7
May 1 Balance 135,000
31 Closing 23 135,000 — —
Account No.
410
Post.
Item Ref. Debit Credit Debit Credit
Balance
Date
Account:
Sales
Balance
Date
Account:
Lynn Tolley, Capital
Balance
Date
Account:
Lynn Tolley, Drawing
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Prob. 2 (Continued)
Account No. 510
Post.
Account No. 520
Post.
Item Ref. Debit Credit Debit Credit
20Y7
May 1 Balance 664,800
28 21 56,000 720,800
31 Adjusting 22 7,000 727,800
31 Closing 23 727,800 — —
Account No. 521
Account No. 522
Post.
Item Ref. Debit Credit Debit Credit
20Y7
May 31 Adjusting 22 14,000 14,000
31 Closing 23 14,000 — —
Account: Depreciation Expense
Balance
Date
Balance
Date
Account: Advertising Expense
Account: Cost of Merchandise Sold
Balance
Account: Sales Salaries Expense