Chapter 5: Q5-6RQ (page 294)
What are the two types of inventory accounting systems? Briefly describe each.
The two major types of inventory accounting systems are periodic and perpetual inventory systems.
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The adjusted trial balance of Quality Office Systems at March 31, 2018, follows:
Requirements
1. Journalize the required closing entries at March 31, 2018.
2. Set up T-accounts for Income Summary; Retained Earnings; and Dividends. Post the closing entries to the T-accounts, and calculate their ending balances.
3. How much was Quality Office’s net income or net loss?
The unadjusted trial balance for Tuttle Electronics Company follows:
TUTTLE ELECTRONICS COMPANY
Unadjusted Trial Balance
October 31, 2018
Balance
Account Title Debit Credit
Cash \(4,200
Accounts Receivable 33,800
Merchandise Inventory 45,700
Office Supplies 5,700
Equipment 129,500
Accumulated Depreciation-Equipment \)37,200
Accounts Payable 15,600
Unearned Revenue 13,400
Notes Payable, long-term 53,000
Common Stock 48,000
Retained Earnings 6,700
Dividends 27,000
Sales Revenue 300,300
Cost of Goods Sold 171,600
Salaries Expense (Selling) 26,000
Rent Expense (Selling) 15,400
Salaries Expense (Administrative) 4,800
Utilities Expense (Administrative) 10,500
Total \(474,200 \)474,200
Requirements
1. Journalize the adjusting entries using the following data:
a. Interest revenue accrued, \(550.
b. Salaries (Selling) accrued, \)2,800.
c. Depreciation Expense—Equipment (Administrative), \(1,295.
d. Interest expense accrued, \)1,500.
e. A physical count of inventory was completed. The ending Merchandise Inventory should have a balance of \(45,300.
f. Tuttle estimates that approximately \)6,200 of merchandise sold will be returned with a cost of $2,480.
2. Prepare Tuttle Electronics’s adjusted trial balance as of October 31, 2018.
3. Prepare Tuttle Electronics’s multi-step income statement for year ended October 31, 2018.
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.
Journalize the following sales transactions for Morris Supply. Explanations are not required.
Mar. 1 Morris Supply sold merchandise inventory for \(3,000. The cost of the inventory was \)1,800. The customer paid cash. Morris Supply was running a promotion, and the customer received a \(150 award at the time of sale that can be used at a future date on any Morris Supply merchandise.
3 Sold \)6,000 of supplies on account. Credit terms are 2/10, n/45, FOB destination. The cost of goods is \(3,600.
10 Received payment from the customer on the amount due from March 3, less the discount.
Apr. 15 The customer used the \)150 award when purchasing merchandise inventory for \(200; the inventory cost was \)120. The customer paid cash.
Clink Electric uses the periodic inventory system. Clink reported the following selected amounts at May 31, 2018:
Merchandise Inventory, June 1, 2017 \( 16,000 Freight In \) 6,000
Merchandise Inventory, May 31, 2018 21,500 Net Sales Revenue 138,000
Purchases 81,000 Common Stock 32,000
Purchase Discounts 3,000 Retained Earnings 17,000
Purchase Returns and Allowances 6,600
Compute the following for Clink:
a. Cost of goods sold.
b. Gross profit.
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