CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
3.
Debit Credit
Lynn Tolley, Capital 685,300
Lynn Tolley, Drawing 135,000
Sales 5,532,350
Sales Returns and Allowances 113,700
Sales Discounts 61,600
May 31, 2014
PALISADE CREEK CO.
Unadjusted Trial Balance
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
4. and 6. Page 22
Post.
Ref. Debit Credit
2014
May 31 Cost of Merchandise Sold 510 11,950
Merchandise Inventory 115 11,950
Date
JOURNAL
Adjusting Entries
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
7.
Debit Credit
Balances Balances
Cash 84,500
Sales Returns and Allowances 113,700
Sales Discounts 61,600
Cost of Merchandise Sold 3,012,150
May 31, 2014
PALISADE CREEK CO.
Adjusted Trial Balance
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
8.
Revenue from sales:
Sales $5,532,350
Store supplies expense 9,800
Miscellaneous selling expense 12,600
Lynn Tolley, capital, June 1, 2013 $ 685,300
PALISADE CREEK CO.
Statement of Owner’s Equity
For the Year Ended May 31, 2014
PALISADE CREEK CO.
Income Statement
For the Year Ended May 31, 2014
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
Current assets:
Cash $ 84,500
Accounts receivable 247,450
PALISADE CREEK CO.
Balance Sheet
May 31, 2014
Assets
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
9. Page 23
Post.
Ref. Debit Credit
2014
May 31 Sales 410 5,532,350
Income Summary 312 5,532,350
Date
JOURNAL
Closing Entries
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Continued)
10.
Debit Credit
Balances Balances
Cash 84,500
May 31, 2014
PALISADE CREEK CO.
Post-Closing Trial Balance
CHAPTER 6 Accounting for Merchandising Businesses
Comp. Problem 2 (Concluded)
5. Optional.
Account Title Debit Credit Debit Credit Debit Credit Debit Credit
Cash 84,500 84,500 84,500
Accounts Receivable 247,450 247,450 247,450
Lynn Tolley, Drawing 135,000 135,000 135,000
Sales 5,532,350 5,532,350 5,532,350
Sales Returns and Allowances 113,700 113,700 113,700
*This solution is applicable only if the end-of-period spreadsheet (work sheet) is used.
SheetTrial Balance
Debit Credit
Trial Balance
Income
StatementAdjustments
PALISADE CREEK CO.
End-of-Period Spreadsheet (Work Sheet)
For the Year Ended May 31, 2014
BalanceUnadjusted Adjusted
CHAPTER 6 Accounting for Merchandising Businesses
CP 6–1
Standards of Ethical Conduct for Management Accountants requires management
CP 6–2
Cam Pfeifer is correct. The accounts payable due suppliers could be included on
the balance sheet at an amount of $314,500 ($269,500 + $45,000). This is the
amount that will be expected to be paid to satisfy the obligation (liability) to
CASES & PROJECTS
CHAPTER 6 Accounting for Merchandising Businesses
CP 6–3
1. If Mark doesn’t need the stereo immediately (by the next day), Wholesale Stereo offers
the best buy, as shown below.
Wholesale Stereo:
Tru-Sound Systems:
List price…………………………………………………………………………
…
$1,175.00
…
…
…
If Mark needs the stereo immediately (the next day), then Tru-Sound Systems has the
best price. This is because a shipping and handling charge of $89.99 would be
added to the Wholesale Stereo, as shown below.
Wholesale Stereo list price……………………………………………………
…
$1,200.00
…
…
…
CHAPTER 6 Accounting for Merchandising Businesses
CP 6–3 (Concluded)
$1,280.75
2. Other considerations in buying the stereo include the ability to have the stereo
repaired locally. In addition, Tru-Sound Systems’ employees would presumably
CP 6–4
1.
Revenues:
Net sales (a) $1,485,000
Notes:
a. Projected net sales
WATERCRAFT SUPPLY COMPANY
Projected Income Statement
For the Year Ended October 31, 2015
CHAPTER 6 Accounting for Merchandising Businesses
CP 6–4 (Concluded)
$384,650, a change of $63,650.
b. Possible concerns related to the proposed changes include the following:
The primary concern is with the accuracy of the estimates used for
projecting the effects of the proposed changes. If the increase in sales
CP 6–5
Note to Instructors: The purpose of this activity is to familiarize students with the
variety of possible purchase prices for a fairly common household item. Students
should report several alternative prices when they consider the source of the