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P5A-36A, cont.
Mar. 26
Sales Returns and Allowances
200
Accounts Receivable—Smecker
200
P5A-37A Preparing a multi-step income statement and journalizing closing entries
Learning Objective 7
Appendix 5A
1. Gross Profit $200,200
Travis Department Store uses a periodic inventory system. The adjusted trial balance of Travis
Department Store at December 31, 2016, follows:
Requirements
1. Prepare Travis Department Store’s multi-step income statement for the year ended
December 31, 2016. Assume ending Merchandise Inventory is $36,500.
2. Journalize Travis Department Store’s closing entries.
SOLUTION
Requirement 1
TRAVIS DEPARTMENT STORE
Income Statement
Year Ended December 31, 2016
P5A-37A, cont.
Requirement 2
Date
Accounts and Explanation
Debit
Credit
Dec. 31
Sales Revenue
387,000
Purchase Returns and Allowances
113,000
Purchase Discounts
6,700
Merchandise Inventory (ending)
36,500
Income Summary
543,200
Problems (Group B)
For all problems, assume the perpetual inventory system is used unless stated otherwise. Round all
numbers to the nearest whole dollar unless stated otherwise.
P5-38B Journalizing purchase and sale transactions
Learning Objectives 1, 2, 3
Feb. 12 Cash $5,586
Journalize the following transactions that occurred in February 2016 for Faucet. No explanations are
needed. Identify each accounts payable and accounts receivable with the vendor or customer name.
SOLUTION
Date
Accounts and Explanation
Debit
Credit
Feb. 3
Merchandise Inventory
3,500
Accounts Payable—Sidecki Wholesalers
3,500
Cost of Goods Sold
2,508
Merchandise Inventory
2,508
9
Merchandise Inventory
6,000
Accounts Payable—Teaton Wholesalers
6,000
10
Accounts Payable—Sidecki Wholesalers ($3,500 – $800)
2,700
Cash ($2,700 – $54)
2,646
Merchandise Inventory ($2,700 × 0.02)
54
P5-38B, cont.
Feb. 23
Sales Returns and Allowances
500
Accounts Receivable—Jackson Company
500
26
Sales Returns and Allowances
100
Accounts Receivable—Secker
100
27
Cash ($1,985 – $38)
1,947
Sales Discounts (($2,085 – $85 - $100) × 0.02)
38
Accounts Receivable—Secker ($2,085 – $100)
1,985
P5-39B Journalizing purchase and sale transactions
Learning Objectives 1, 2, 3
Jan. 14 Merch. Inv. $25
Journalize the following transactions that occurred in January 2016 for May’s Amusements. No
explanations are needed. Identify each accounts payable and accounts receivable with the vendor or
customer name.
SOLUTION
Date
Accounts and Explanation
Debit
Credit
Jan. 4
Merchandise Inventory
5,000
Accounts Payable—Vanderbilt Company
5,000
6
Merchandise Inventory
150
Cash
150
Cost of Goods Sold
5,555
Merchandise Inventory
5,555
12
Delivery Expense
30
Cash
30
13
Accounts Receivable—Cadet Company
8,800
Sales Revenue
8,800
Cost of Goods Sold
4,400
Merchandise Inventory
4,400
P5-39B, cont.
Jan. 18
Merchandise Inventory
4,600
Accounts Payable—Roberts Corporation
4,600
20
Cash ($9,300 – $279)
9,021
Sales Discounts ($9,300 × 0.03)
279
Accounts Receivable—Gilmore Corporation ($10,100 – $800)
9,300
P5-40B Preparing a multi-step income statement, journalizing closing entries, and preparing a
post-closing trial balance
Learning Objectives 4, 5
1. Operating Income $62,600
The adjusted trial balance of Rachel Rey Dance Company at April 30, 2016, follows:
Requirements
1. Prepare Rachel Rey’s multi-step income statement for the year ended April 30, 2016.
2. Journalize Rachel Rey’s closing entries.
3. Prepare a post-closing trial balance as of April 30, 2016.
SOLUTION
Requirement 1
RACHAEL REY DANCE COMPANY
Income Statement
Year Ended April 30, 2016
Sales Revenue
$ 180,000
Less: Sales Returns and Allowances
6,000
Requirement 2
Date
Accounts and Explanation
Debit
Credit
Apr. 30
Sales Revenue
180,000
Income Summary
180,000
P5-40B, cont.
Requirement 3
RACHAEL REY DANCE COMPANY
Post-Closing Trial Balance
April 30, 2016
Account Title
Balance
Debit
Credit
Cash
$ 3,700
Accounts Receivable
38,100
P5-41B Journalizing adjusting entries, preparing adjusted trial balance, and preparing financial
statements
Learning Objectives 4, 5
2. Total Credits $490,410
The unadjusted trial balance for Thomas Electronics Company follows:
Requirements
1. Journalize the adjusting entries using the following data:
a. Interest revenue accrued, $300.
b. Salaries (Selling) accrued, $2,400.
c. Depreciation Expense—Equipment (Administrative), $1,310.
d. Interest expense accrued, $1,300.
e. A physical count of inventory was completed. The ending Merchandise Inventory should have a
balance of $44,900.
2. Prepare Thomas Electronics’s adjusted trial balance as of October 31, 2016.
3. Prepare Thomas Electronics’s multi-step income statement for year ended October 31, 2016.
4. Prepare Thomas Electronics’s statement of retained earnings for year ended October 31, 2016.
5. Prepare Thomas Electronics’s classified balance sheet in report form as of October 31, 2016.
SOLUTION
Requirement 1
Date
Accounts and Explanation
Debit
Credit
Oct. 31
Interest Receivable
300
Interest Revenue
300
P5-41B, cont.
Requirement 2
THOMAS ELECTRONICS COMPANY
Adjusted Trial Balance
October 31, 2016
Account Title
Balance
Debit
Credit
Cash
$ 4,400
Interest Payable
1,300
Unearned Revenue
13,700
Notes Payable, long-term
47,000
Common Stock
45,000
P5-41B, cont.
Requirement 3
THOMAS ELECTRONICS COMPANY
Income Statement
Year Ended October 31, 2016
Sales Revenue
$ 310,000
Less: Sales Returns and Allowances
5,500
Total Selling Expenses
42,700
Administrative Expenses:
Salaries Expense
4,900
Utilities Expense
11,000
Requirement 4
THOMAS ELECTRONICS COMPANY
Statement of Retained Earnings
Year Ended October 31, 2016
Retained Earnings, November 1, 2015
$ 15,700
Net income for the year
68,390
$ 84,090
P5-41B, cont.
Requirement 5
THOMAS ELECTRONICS COMPANY
Balance Sheet
October 31, 2016
Assets
Current Assets:
Cash
$ 4,400
Less: Accumulated Depreciation—Equipment
(39,210)
Total Plant Assets
91,790
Total Assets
$ 182,290
Liabilities
Current Liabilities:
Accounts Payable
$ 15,800
P5-42B Preparing a single-step income statement, preparing a multi-step income statement, and
computing the gross profit percentage
Learning Objectives 5, 6
2. Operating Income $96,595
The records of Farm Fresh Beef Company list the following selected accounts for the quarter ended
September 30, 2016:
Requirements
1. Prepare a single-step income statement.
2. Prepare a multi-step income statement.
3. J. Douglas, manager of the company, strives to earn a gross profit percentage of at least 50%. Did
Farm Fresh Beef achieve this goal? Show your calculations.
SOLUTION
Requirement 1
FARM FRESH BEEF COMPANY
Income Statement
Quarter Ended September 30, 2016
Revenues:
Net Sales Revenue
$ 305,000
