Chapter 5: Q5-12RQ (page 294)
How is the net cost of inventory calculated?
The net cost of inventory includes the beginning inventory, the purchases made during the year, and the closing inventory.
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What are the two types of inventory accounting systems? Briefly describe each.
Lawrence Appliances had the following purchase transactions. Journalize all necessary transactions using the periodic inventory system. Explanations are not required.
Sep. 4 Purchased inventory of \(6,900 on account from Max Appliance Wholesale, an appliance wholesaler. Terms were 3/15, n/30, FOB shipping point.
4 Paid freight charges, \)480.
10 Returned \(300 of inventory to Max.
17 Paid Max Appliance Wholesale, less return, and discount.
20 Purchased inventory of \)3,900 from MY Appliance, an appliance wholesaler. Terms were 1/10, n/45, FOB destination.
22 Received a $400 allowance from MY Appliance for damaged but usable goods.
29 Paid MY Appliance, less allowance and discount.
The records of Grade A Beef Company list the following selected accounts for the quarter ended September 30, 2018:
Interest Revenue
Merchandise Inventory 46,300 Accounts Receivable 33,500
Notes Payable, long-term 47,000 Accumulated Depreciation— Equipment 36,500
Salaries Payable 2,600 Common Stock 38,000
Net Sales Revenue 294,000 Retained Earnings 3,610
Rent Expense (Selling) 16,700 Dividends 15,000
Salaries Expense (Administrative) 2,500 Cash 7,300
Office Supplies 5,800 Cost of Goods Sold 161,700
Unearned Revenue 13,800 Equipment 131,000
Interest Expense 2,300 Interest Payable 900
Depreciation Expense—Equipment (Administrative) 1,310
Rent Expense (Administrative) 7,400
Utilities Expense (Administrative) 4,500 Salaries Expense (Selling) 5,000
Delivery Expense (Selling) 3,100 Utilities Expense (Selling) 10,900
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 Grade A Beef achieve this goal? Show your calculations
Click Computers has the following transactions in July related to purchasing and sale of merchandise inventory.
July 1 Purchase of \(20,500 worth of computers on account, terms of 2/10, n/30.
3 Return of \)4,000 of the computers to the vendor.
9 Payment made on the account.
12 Sold computers on account for $8,000 to a customer, terms 3/15, n/30.
26 Received payment from customer on balance due.
Journalize the transactions for Click Computers assuming that the company uses the periodic inventory system.
Journalize the following transactions that occurred in June 2018 for Daley Company. Assume Daley uses the periodic inventory system. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Daley estimates sales returns at the end of each month.
Jun. 3 Purchased merchandise inventory on account from Sherry Wholesalers, \(5,500. Terms 3/15, n/EOM, FOB shipping point.
4 Paid freight bill of \)42 on June 3 purchase.
4 Purchased merchandise inventory for cash of \(1,100.
6 Returned \)200 of inventory from June 3 purchase.
8 Sold merchandise inventory to Henrich Company, \(4,400, on account. Terms 2/15, n/35.
9 Purchased merchandise inventory on account from Tex Wholesalers, \)4,600. Terms 1/10, n/30, FOB destination.
10 Made payment to Sherry Wholesalers for goods purchased on June 3, less return and discount.
12 Received payment from Henrich Company, less discount.
13 After negotiations, received a \(300 allowance from Tex Wholesalers.
15 Sold merchandise inventory to Jarvis Company, \)1,500, on account. Terms n/EOM.
22 Made payment, less allowance, to Tex Wholesalers for goods purchased on June 9.
23 Jarvis Company returned \(100 of the merchandise sold on June 15.
25 Sold merchandise inventory to Smith for \)700 on account. Terms of 3/10, n/30 was offered, FOB shipping point.
29 Received payment from Smith, less discount.
30 Received payment from Jarvis Company, less return.
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