Answers 5
Answers 5
Questions
Brief
Exercises
Problems
Set A
Exercises
Problems
Set B
1, 2, 3, 4, 5
6, 7
2, 4, 5
1, 3, 4, 5,
6
1, 2, 3, *9.
*10
1, 2, 3, *9,
*10
7, 8, 9
3, 4, 5
2, 3, 4, 5
1, 2, 3, *9,
*10
1, 2, 3, *9,
*10
10, 11, 12
6, 7
6, 7
4, 5, *11
4, 5, *11
8, 9, 10
7, 8, 9, 10
3, 4, 5, 6, 7,
*10, *11
3, 4, 5, 6, 7,
*10, *11
17
10, 11
10, 11
18, 19, 20
11
10, 11
*8.
*21, *22
*12
*12
*9, *10
*9, *10
*9.
*23
*13
*13
*11
*11
*Note: All asterisked Questions, Exercises, and Problems relate to material contained in the Appendices to each
chapter.
5-1
Difficulty
Level
Time
Allotted (min.)
1A
Moderate
30-40
2A
Moderate
20-30
3A
Moderate
60-70
4A
Moderate
30-40
5A
Moderate
40-50
6A
Simple
10-15
7A
Complex
50-60
8A
Moderate
20-25
*9A
Moderate
40-50
*10A
Moderate
70-80
*11A
Moderate
50-60
1B
Moderate
30-40
2B
Moderate
20-30
3B
Moderate
60-70
4B
Moderate
30-40
5B
Moderate
40-50
6B
Simple
10-15
7B
Complex
50-60
8B
Moderate
20-25
*9B
Moderate
40-50
*10B
Moderate
70-80
*11B
Moderate
50-60
5-2
Knowledge
Comprehension
Q5-1
Q5-4
Q5-2
Q5-5
Q5-3
Application
BE5-1
Analysis
Q5-6
Q5-7
BE5-2
BE5-4
BE5-5
E5-1
E5-3
E5-4
E5-6
P5-1A
P5-2A
BE5-3
BE5-4
BE5-5
E5-2
E5-3
E5-4
P5-1A
P5-2A
BE5-6
BE5-7
E5-6
E5-7
P5-4A
E5-5
2.
3.
Q5-8
Q5-7
Q5-9
4.
Q5-12
Q5-10
Q5-11
5.
Q5-14
P5-6A
P5-6B
Q5-15
Q5-16
6.
7.
*8.
Q5-18
*Q5-23
*BE5-13
Q5-13
BE5-8
BE5-9
BE5-10
E5-7
E5-9
E-10
P5-3A
P5-4A
P5-5A
Q5-17
BE5-10
Q5-19
Q5-20
P5-3A
*P5-9A
*P5-10A
P5-1B
P5-2B
P5-3B
*P5-9B
*P5-10B
P5-3A
*P5-9A
*P5-10A
P5-1B
P5-2B
P5-3B
*P5-9B
*P5-10B
P5-5A
*P5-11A
P5-4B
P5-5B
*P5-11B
E5-5
P5-7A
*P5-10A
*P5-11A
P5-3B
P5-4B
P5-5B
P5-7B
*P5-10B
*P5-11B
E5-8
BE5-11
E5-10
E5-11
P5-8A
P5-8B
BE5-11
E5-10
*Q5-21
*Q5-22
*BE5-12
*E5-12
*P5-11A
*P5-10B
*P5-11B
*E5-13
Broadening Your
Perspective
Evaluation
BYP5-6
BYP5-7
E5-11
P5-8A
P5-8B
*P5-9A
*P5-10A
*P5-9B
*P5-10B
BYP5-1
BYP 5-2
BYP5-3
BYP5-4
BYP5-5
5-3
Synthesis
ANSWERS TO QUESTIONS
1. The components of revenues and expenses differ as follows:
Merchandising
Service
Service Revenue, Fees
Earned, Rent Revenue,
Interest Revenue,
Investment Income, Gains
Revenue
Sales
Other
Revenue
Expenses
Other
Expense
All expenses
Less
Cost of
Goods
Sold
Equals
Gross
Profit
Less
Operating
Expenses
Equals
Net
Income
5-5
(b)
Seller
Cash sales
Cash................................................
Sales........................................
Debit Credit
XXX
XXX
XXX
Accounts Receivable....................
Sales........................................
XXX
XXX
Sales returns
Sales Returns and Allowances....
& allowances
Accounts Receivable or Cash
XXX
Merchandise Inventory.................
Cost of Goods Sold................
XXX
Merchandise Inventory................
Cash........................................
XXX
XXX
XXX
Credit sales
Purchaser
Cash purchase
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
9. Sales returns are not debited directly to the Sales account because
this would not provide information on the cost of the goods returned.
This information can be useful in making decisions. Debiting returns
directly to sales may also cause problems in comparing sales for
different periods.
5-6
$580,000
0300,000
$280,000
14.
(a)
15.
16.
The single-step income statement differs from the multiplestep income statement in that (1) all data are classified into two
categories: Revenues and expenses; and (2) only one step,
subtracting total expenses from total revenues, is required in
determining net income (or net loss).
5-7
18. Two ratios that help management determine whether or not there is
sufficient inventory on hand are Inventory turnover and days sales in
inventory
19. Managing inventory is critical to a companys success. It is often the
largest current asset (inventory) and the largest expense (cost of
goods sold) on the income statement. Companies must manage the
quantity of inventory on hand to avoid excessive cost and to ensure
they can meet demand.
20. An increase in days sales in inventory would be viewed as a
deterioration because it means there is more inventory on hand in
relation to sales.
*21. Accounts Receivable....................................................
Sales......................................................................
GST Payable.........................................................
PST Payable..........................................................
1,053
600
2,160
140
*23. (a)
(b)
900
63
90
600
2,300
900,000
130,000
770,000
5-9
(b) March 6
900,000
600,000
130,000
Merchandise Inventory................................
Cost of Goods Sold..............................
90,000
90,000
770,000
Merchandise Inventory................................
Cash.......................................................
900
900
Mayo Company
Nov. 12
Cash..............................................................
Sales......................................................
900
700
5-10
900
700
500
Accounts Payable............................................
Merchandise Inventory (3 X $25).........
75
675
375
March
3
6
500
75
675
375
31
900
900
31
Sales.................................................................
Prasad, Capital......................................
180,000
Prasad, Capital.................................................
Sales Returns and Allowances............
Cost of Goods Sold..............................
102,000
180,000
2,000
100,000
$400,000
30,000
$370,000
Section
Section
Revenues
Expenses
Expenses
Revenues
5-12
8,000
1,100
630
9,730
5-13
SOLUTIONS TO EXERCISES
EXERCISE 5-1
1.
2.
3.
4.
5.
April 5
April 6
April 7
April 8
May
900
900
Equipment....................................................... 26,000
Accounts Payable....................................
Accounts Payable..........................................
Merchandise Inventory...........................
26,000
3,000
5-14
18,000
3,000
15,000
EXERCISE 5-2
(a) Pippen Company
1.
2.
3.
Dec.
Dec.
Dec. 13
Accounts Receivable................................
Sales....................................................
400,000
320,000
20,000
380,000
Merchandise Inventory.............................
Accounts Payable...............................
400,000
Accounts Payable.....................................
Merchandise Inventory.......................
20,000
Accounts Payable.....................................
Cash.....................................................
380,000
400,000
320,000
20,000
380,000
Dec.
Dec.
3
8
Dec. 13
5-15
400,000
20,000
380,000
EXERCISE 5-3
Sept. 6
10
12
14
20
1,200
40
780
520
30
Merchandise Inventory...........................................
Cost of Goods Sold.........................................
20
900
600
5-16
1,200
40
780
520
30
20
900
600
EXERCISE 5-4
Sept. 2
5
8
12
20
30
1,350
Accounts Payable....................................................
Merchandise Inventory....................................
60
Accounts Receivable..............................................
Sales (50 x $25)................................................
1,250
750
Accounts Receivable..............................................
Sales (30 x $25)................................................
750
450
240
15*
1,350
60
1,250
750
750
450
240
15
5-17
EXERCISE 5-5
1.
2.
3.
4.
150
Supplies..............................................................................
Cash.....................................................................................
Accounts Payable.......................................................
Merchandise Inventory...............................................
250
250
Sales....................................................................................
Merchandise Inventory...............................................
50
Cash.....................................................................................
Merchandise Inventory...............................................
270
5-18
150
250
250
50
270
EXERCISE 5-6
(a) Jun. 10
11
12
July
7
15
15
(b) July 31
31
Merchandise Inventory.....................................
Accounts Payable......................................
5,000
Merchandise Inventory.....................................
Cash............................................................
300
Accounts Payable..............................................
Merchandise Inventory..............................
500
5,000
300
500
4,500
Cash...................................................................
Sales...........................................................
8,500
4,800
Sales...................................................................
Capital.........................................................
8,500
Capital................................................................
Cost of Goods Sold...................................
4,800
5-19
4,500
8,500
4,800
8,500
4,800
EXERCISE 5-7
(a)
CECILIE COMPANY
Income Statement (Partial)
For the Year Ended October 31, 2003
Sales revenues
Sales.....................................................................................
Less: Sales returns and allowances.................................
Net sales...............................................................................
$900,000
24,000
$876,000
31
31
Sales............................................................ 900,000
Capital..................................................
Capital.........................................................
Sales Returns and Allowances..........
Freight Out..........................................
5-20
900,000
36,000
24,000
12,000
EXERCISE 5-8
Sales
Less: Sales returns
Net sales
Less: Cost of goods sold
Gross profit
Less: Operating expenses
Net income
Natural
Cosmetics
$90,000
(a) 16,000
74,000
64,000
10,000
6,000
(b) $ 4,000
Mattar
Grocery
(c) $100,000
6,000
94,000
(d) 72,000
22,000
(e) 12,000
$ 10,000
Allied
Wholesalers
$144,000
12,000
(f) 132,000
(g) 108,000
24,000
18,000
(h) $ 6,000
(a) Sales...........................................................................
*Sales returns............................................................
Net sales....................................................................
$90,000
(16,000)
$74,000
$10,000
(6,000)
$ 4,000
(c) *Sales.........................................................................
Sales returns.............................................................
Net sales....................................................................
$100,000
(6,000)
$ 94,000
$94,000
(72,000)
$22,000
$22,000
(12,000)
$10,000
(f)
Sales...........................................................................
Sales returns.............................................................
*Net sales...................................................................
$144,000
(12,000)
$132,000
$132,000
(108,000)
$ 24,000
$24,000
(18,000)
$ 6,000
5-21
EXERCISE 5-9
(a)
CHEVALIER COMPANY
Income Statement
For the Year Ended December 31, 2002
Net sales......................................................................
Cost of goods sold......................................................
Gross profit..................................................................
Operating expenses
Selling expenses.................................................
Administrative expenses....................................
Total operating expenses............................
Income from operations.............................................
Other revenues and gains
Interest revenue...................................................
Other expenses and losses
Interest expense.....................................$70,000
Loss on sale of equipment...................... 10,000
Net income...................................................................
(b)
$2,359,000
00,989,000
1,370,000
$690,000
0435,000
1,125,000
245,000
$45,000
80,000
35,000
$ 210,000
CHEVALIER COMPANY
Income Statement
For the Year Ended December 31, 2002
Revenues
Net sales..............................................................
Interest revenue..................................................
Total revenues..............................................
Expenses
Cost of goods sold.............................................
Selling expenses.................................................
Administrative expenses...................................
Interest expense.................................................
Loss on sale of equipment................................
Total expenses.............................................
Net income..................................................................
5-22
$2,359,000
0 45,000
2,404,000
$989,000
690,000
435,000
70,000
0010,000
2,194,000
$ 210,000
EXERCISE 5-10
(a)
JETFORM CORPORATION
Income Statement
For the Year Ended April 30, 2000
(in thousands)
Revenues
Revenue from products and services.................
Interest revenue....................................................
Gain on sale of assets..........................................
Other income.........................................................
Total revenues.................................................
Expenses
Cost of products and services.............................
Sales and marketing expenses............................
General and administrative expenses.................
Amortization expense...........................................
Income tax expense...............................................
Total expenses................................................
Net loss...........................................................................
5-23
$94,317
2,868
1,813
295
$ 99,293
$24,426
45,097
26,485
10,300
1,086
107,394
($ 8,101)
JETFORM CORPORATION
Income Statement
For the Year Ended April 30, 2000
(in thousands)
$ 94,317
00, 24,426
69,891
$45,097
0 36,785
81,882
(11,991)
$2,868
1,813
295
4,976
1,086
3,890
($ 8,101)
*Note to Instructor: You may wish to explain that income tax expense is
usually presented differently (following an income (or loss) before income
taxes caption) in corporate income statements.
5-24
5-25
EXERCISE 5-11
Inventory turnover
2000 = 7.3 times [$1,298,606 ($193,831 + $160,092) 2]
1999 = 7.5 times [$1,546,723 ($160,092 + $254,690) 2]
Days sales in inventory
2000 = 50 days (365 7.3)
1999 = 49 days (365 7.5)
Gross profit margin
2000 = 23% [($1,683,142 - $1,298,606) $1,683,142]
1999 = 21% [($1,960,274 - $1,546,723) $1,960,274]
The gross profit margin has improved, increasing from 21% in 1999 to 23%
in 2000. The inventory turnover and days sales in inventory are basically
unchanged from one year to the next.
5-26
*EXERCISE 5-12
Sept. 2
12
20
30
1,350.00
94.50
Accounts Payable..........................................
Merchandise Inventory..........................
GST Recoverable....................................
64.20
Accounts Receivable.....................................
Sales (50 x $25).......................................
GST Payable ($1,250 x 7%)....................
1,337.50
750.00
Accounts Receivable.....................................
Sales (30 x $25).......................................
GST Payable ($750 x 7%).......................
802.50
450.00
240.00
16.80
1,444.50
60.00
4.20
1250.00
87.50
750.00
750.00
52.50
450.00
256.80
15.00*
15.00
5-27
*EXERCISE 5-13
(a)
Accounts
Adjusted
Trial Balance
Debit
Cash
Merchandise Inven.
Sales
Sales Returns
Cost of Goods Sold
Rent Expense
Credit
Income
Statement
Debit
Credit
9,000
80,000
Balance
Sheet
Debit
Credit
9,000
80,000
450,000
10,000
250,000
42,000
450,000
10,000
250,000
42,000
(b) The accounts appearing in the post-closing trial balance are the balance
sheet accounts of Cash ($9,000) and Merchandise Inventory ($80,000).
5-28
SOLUTIONS TO PROBLEMS
PROBLEM 5-1A
(a)
April 5
13
17
20
22
24
28
72,000
56,000
96,000
Merchandise InventoryConvertibles
(2 x $26,000)....................................................... 52,000
Accounts Payable......................................
52,000
26,000
84,000
31,000
26,000
5-29
Merchandise Inventory
Convertibles
Bal. 78,000
26,000
52,000
26,000
78,000
Merchandise Inventory
Recreation Vehicles
Bal. 56,000
84,000
56,000
28,000
5-30
PROBLEM 5-2A
GENERAL JOURNAL
Date
Account Titles
July 1
1,500
2,000
1,200
1,500
12
Cash............................................................ 101
Accounts Receivable......................... 112
2,000
17
1,500
900
18
1,800
20
300
21
Cash............................................................ 101
Accounts Receivable......................... 112
1,500
5-31
Ref. Debit
Credit
1,500
2,000
1,200
1,500
2,000
1,500
900
1,700
100
300
1,500
Account Titles
Ref. Debit
July 22
2,000
1,200
30
1,400
31
250
150
5-32
Credit
2,000
1,200
1,400
250
150
PROBLEM 5-3A
(a)
Date
Apr. 2
4
GENERAL JOURNAL
Account Titles
Ref. Debit
Merchandise Inventory.............................. 120 4,900
Accounts Payable.............................. 201
Accounts Receivable................................. 112
Sales.................................................... 401
5,000
4,000
200
300
14
4,400
16
Cash............................................................ 101
Merchandise Inventory...................... 120
500
18
4,200
20
100
23
Cash............................................................ 101
Sales.................................................... 401
6,400
5,200
5-33
J1
Credit
4,900
5,000
4,000
200
300
4,400
500
4,200
100
6,400
5,200
Account Titles
Ref. Debit
Merchandise Inventory.............................. 120 2,300
Cash.................................................... 101
27
4,600
28
Cash............................................................ 101
Accounts Receivable......................... 112
5,000
29
90
60
3,700
3,000
30
J2
Credit
2,300
4,600
5,000
90
60
3,700
3,000
(b)
Cash
Date
Apr.
No. 101
Explanation
1
5
14
16
20
23
26
27
28
29
Balance
Ref.
J1
J1
J1
J1
J1
J2
J2
J2
J2
5-34
Debit
Credit
Balance
200
4,400
500
100
6,400
2,300
4,600
5,000
90
9,000
8,800
4,400
4,900
4,800
11,200
8,900
4,300
9,300
9,210
Explanation
4
28
30
No. 112
Ref.
J1
J2
J2
Debit
Credit
5,000
5,000
3,700
Merchandise Inventory
Date
Apr.
Explanation
2
4
6
14
16
18
20
23
26
29
30
Ref.
Debit
Credit
Apr.
Explanation
2
6
18
27
Balance
4,900
4,000
300
4,400
500
4,200
100
5,200
2,300
60
3,000
Accounts Payable
Date
5,000
0
3,700
No. 120
J1
J1
J1
J1
J1
J1
J1
J1
J2
J2
J2
1415
Balance
4,900
900
600
5,000
4,500
8,700
8,800
3,600
5,900
5,960
2,960
No. 201
Ref.
J1
J1
J1
J2
5-35
Debit
Credit
4,900
300
4,600
4,200
Balance
4,900
4,600
8,800
4,200
Explanation
Apr.
Balance
No. 301
Ref.
Debit
Credit
Balance
9,000
Sales
No. 401
Date
Apr.
Explanation
4
23
30
Ref.
Debit
Credit
J1
J1
J2
Balance
5,000
6,400
3,700
Explanation
Apr. 29
No. 412
Ref.
Debit
J2
Credit
Apr.
Explanation
4
23
29
30
90
No. 505
Ref.
J1
J1
J2
J2
Debit
Credit
Apr.
60
3,000
4,000
9,200
9,140
12,140
No. 644
Explanation
Balance
4,000
5,200
Freight Out
Date
Balance
90
5,000
11,400
15,100
Ref.
J1
5-36
Debit
200
Credit
Balance
200
(d)
$15,100
90
15,010
12,140
$2,870
Current assets
Cash.................................................................................
Accounts receivable.......................................................
Merchandise inventory...................................................
Total current assets................................................
5-37
$ 9,210
3,700
2,960
15,870
PROBLEM 5-4A
Adjusting entriesnot required:
Dec. 31
(a)
Insurance Expense...................................................
Prepaid Insurance.............................................
800
Amortization Expense..............................................
Accumulated AmortizationStore Equipment
3,000
Rent Expense............................................................
Rent Payable.....................................................
500
800
3,000
WORLD ENTERPRISES
Income Statement
For the Year Ended December 31, 2002
Sales revenues
Sales..........................................................................
Less: Sales returns and allowances......................
Net sales....................................................................
Cost of goods sold...........................................................
Gross profit .....................................................................
Operating expenses
Salaries expense......................................
$31,600
Amortization expense.............................
3,000
Rent expense ($6,100 + $500).................
6,600
Insurance expense .................................
000800
Total operating expenses...................................
Net income........................................................................
$238,500
4 4,600
233,900
177,000
56,900
... 42,000
$14,900
WORLD ENTERPRISES
Statement of Owners Equity
For the Year Ended December 31, 2002
R. Roger, Capital, January 1............................................
Add: Net income...............................................................
R. Roger, Capital, December 31.......................................
5-38
$50,300
14,900
$65,200
500
$ 14,000
30,600
27,500
1,000
73,100
Capital assets
Equipment........................................................... $42,000
Less: Accumulated amortization Equipment 12,000
30,000
65,200
5-39
Sales............................................................
R. Roger, Capital.................................
238,500
R. Roger, Capital........................................
Sales Returns and Allowances..........
Cost of Goods Sold............................
Salaries Expense................................
Rent Expense......................................
Insurance Expense.............................
Amortization Expense........................
223,600
5-40
238,500
4,600
177,000
31,600
6,600
800
3,000
PROBLEM 5-5A
(a)
DAIGLE DEPARTMENT STORE
Income Statement
For the Year Ended November 30, 2003
Sales revenues
Sales........................................................................................
Less: Sales returns and allowances...................................
Net sales.................................................................................
Cost of goods sold........................................................................
Gross profit ..................................................................................
Operating expenses
Selling expenses
Salaries expense ($139,000 X 70%)
$97,300
Sales commissions expense............
12,750
Amortization expensebuilding
9,500
Delivery expense...............................
8,200
Insurance expense ($9,000 x 50%)
4,500
Amortization expense
delivery equipment........................ 00 4,000
Total selling expenses..............
$136,250
Administrative expenses
Salaries expense ($139,000 X 30%). $41,700
Utilities expense................................
10,600
Insurance expense ($9,000 x 50%). .
4,500
Property tax expense........................
3,500
Total administrative expenses..
0 60,300
Total operating expenses
Income from operations......................................................
Other revenues and gains
Interest revenue...........................................................
$5,000
Other expenses and losses
Interest expense..........................................................
8,000
Net income...........................................................................
5-41
$850,000
10,000
840,000
633,220
206,780
196,550
10,230
000 3,000
$ 7,230
5-42
$84,200
7,230
91,430
012,000
$79,430
5-43
30
30
30
(c) Nov. 30
Nov. 30
30
4,000
9,500
Insurance Expense........................................
Prepaid Expense....................................
9,000
3,500
4,750
4,000
9,500
9,000
3,500
4,750
Sales............................................................... 850,000
Interest Revenue............................................
5,000
B. Daigle, Capital....................................
B. Daigle, Capital........................................... 847,770
Sales Returns and Allowances.............
Cost of Goods Sold................................
Salaries Expense....................................
Amortization ExpenseDelivery
Equipment............................................
Delivery Expense...................................
Sales Commission Expense.................
Amortization ExpenseStore
Equipment............................................
Insurance Expense................................
Property Tax Expense............................
Utilities Expense....................................
Interest Expense....................................
B. Daigle, Capital............................................
B. Daigle, Drawings................................
5-44
855,000
10,000
633,220
139,000
4,000
8,200
12,750
9,500
9,000
3,500
10,600
8,000
12,000
12,000
PROBLEM 5-6A
Account
Accounts Payable
Statement
Balance Sheet
Classification
Current Liabilities
Accounts Receivable
Balance Sheet
Current Assets
Accumulated Amortization
Office Building
Balance Sheet
Capital Assets
(Contra Account)
Accumulated Amortization
Store Equipment
Balance Sheet
Capital Assets
(Contra Account)
Advertising Expense
Income Statement
Selling Expenses
Amortization Expense
Office Building
Income Statement
Administrative Expenses
Amortization Expense
Store Equipment
Income Statement
Selling Expenses
Cash
Balance Sheet
Current Assets
Swirsky, Capital
Balance Sheet
Owners Equity
Freight Out
Income Statement
Selling Expenses
Swirsky, Drawings
Statement of
Owners Equity
Drawings
Income Statement
Other Expenses
Balance Sheet
Current Liabilities
Insurance Expense
Income Statement
Administrative Expenses
Interest Expense
Income Statement
Other Expenses
Interest Payable
Balance Sheet
Current Liabilities
5-45
Account
Statement
Classification
Land
Balance Sheet
Capital Assets
Merchandise Inventory
Balance Sheet
Current Assets
Mortgage Payable
Balance Sheet
Long-Term Liability
Office Building
Balance Sheet
Capital Assets
Prepaid Insurance
Balance Sheet
Current Assets
Salaries Expense
Office Staff
Income Statement
Administrative Expenses
Salaries Expense
Store Staff
Income Statement
Selling Expenses
Salaries Payable
Balance Sheet
Current Liabilities
Income Statement
Contra Revenue
Store Equipment
Balance Sheet
Capital Assets
Utilities ExpenseOffice
Income Statement
Administrative Expenses
Utilities ExpenseStore
Income Statement
Selling Expenses
Wages Payable
Balance Sheet
Current Liabilities
5-46
PROBLEM 5-7A
(a)
MCGRATH COMPANY
Income Statement
For the Year Ended December 31, 2002
Sales revenues
Sales.........................................................................
Less: Sales returns and allowances.....................
Net sales...................................................................
Cost of goods sold..........................................................
Gross profit......................................................................
Operating expenses
Selling expenses
Sales salaries expense
($80,000 + $16,000) ........................... $96,000
Delivery expense................................ 30,000
Advertising expense.......................... 10,000
Sales commissions expense............ 6,000 $142,000
Administrative expenses
Office salaries expense..................... $27,000
Rent expense...................................... 24,000
Utilities expense................................. 12,000
Amortization expenseoffice equip. 8,000
71,000
Total operating expenses.......................................
Income from operations.................................................
Other revenues and gains
Rent revenue............................................................ $40,000
Other expenses and losses
Interest expense......................................................
2,000
Net income.......................................................................
5-47
$800,000
30,000
770,000
555,000
215,000
213,000
2,000
38,000
$ 40,000
5-48
$810,000
770,000
$ 40,000
PROBLEM 5-8A
(a)
2000
Gross profit
margin
Inventory turnover
Days sales in
inventory
1999
19.5%
23.8%
($949,263 - $764,198)
$949,263
($808,251 $615,827)
$808,251
3.5 times
3.3 times
$764,198 [($225,958 +
$212,382) 2]
$615,827 [($212,382 +
$164,557) 2]
104.3 days
110.6 days
(b) IPSCOs gross profit margin declined in 2000. However, its management
of its inventories improved. Its inventory turned over (sold) faster in
2000 and the number of days sales in inventory declined from 110.6 days
to 104.3 days. This means that IPSCO is not holding its inventory for as
long in 2000, as it did in 1999. The faster you sell your inventory, the
faster the company will collect cash/receivables, the lower its carrying
costs, and the reduced risk of inventory obsolescence.
5-49
*PROBLEM 5-9A
GENERAL JOURNAL
Date
Ref.
Debit
4,200
60,000
4 Merchandise Inventory..............................
Cash....................................................
02,000
5 Accounts Payable......................................
Merchandise Inventory......................
GST Recoverable...............................
07,490
6 Accounts Receivable.................................
Sales....................................................
GST Payable.......................................
PST Payable.......................................
23,520
15,000
15 GST Recoverable.......................................
Supplies [$4,000 + (5% x $4,000)].............
Cash....................................................
280
4,200
18 GST Recoverable.......................................
Merchandise Inventory..............................
Cash....................................................
420
6,000
Credit
64,200
02,000
07,000
490
21,000
1,470
1,050
15,000
04,480
06,420
22 Accounts Receivable........................................................
31,360
Sales...........................................................................
GST Payable (7% x $28,000).....................................
PST Payable (5% x $28,000).....................................
28,000
1,960
1,400
20,000
5-50
Date
Debit
Credit
33,600
0
56,710
30 Cash...................................................................................
23,520
Accounts Receivable................................................
00,
23,520
5-51
Ref.
*PROBLEM 5-10A
(a)
GENERAL JOURNAL
Date
J1
Ref.
Debit
114
120
201
42.00
600.00
6 Merchandise Inventory..........................
Cash.................................................
120
101
060.00
8 Accounts Receivable.............................
Sales................................................
GST Payable....................................
PST Payable....................................
112
401
214
215
1,053.00
505
120
630.00
10 Accounts Payable...................................
Merchandise Inventory...................
GST Recoverable ($40 X 7%)........
201
120
114
042.80
11 GST Recoverable....................................
Merchandise Inventory..........................
Cash.................................................
114
120
101
21.00
300.00
14 GST Recoverable....................................
Merchandise Inventory..........................
Accounts Payable...........................
114
120
201
49.00
700.00
15 Cash.........................................................
Merchandise Inventory...................
GST Recoverable............................
101
120
114
053.50
17 Merchandise Inventory..........................
Cash.................................................
120
101
070.00
5-52
Credit
642.00
060.00
900.00
63.00
90.00
630.00
040.00
2.80
321.00
749.00
050.00
3.50
070.00
Ref.
Debit
936.00
560.00
20 Cash............................................................ 101
Accounts Receivable......................... 112
500.00
2.10
3.00
30.00
25.00
599.20
1,170.00
730.00
30 Cash............................................................ 101
Accounts Receivable......................... 112
1,200.00
5-53
Credit
800.00
56.00
80.00
560.00
500.00
035.10
25.00
599.20
1,000.00
70.00
100.00
730.00
1,200.00
Cash
No. 101
Date
Apr.
Explanation
1
6
11
15
17
20
29
30
Balance
Ref.
J1
J1
J1
J1
J2
J2
J2
Debit
Credit
060.00
321.00
053.50
070.00
500.00
599.20
1,200.00
Accounts Receivable
Explanation
Apr.
8
18
20
27
30
30
Ref.
J1
J2
J2
J2
J2
J2
Apr.
Explanation
4
10
11
14
15
2,500.00
2,440.00
2,119.00
2,172.50
2,102.50
2,602.50
2,003.30
3,203.30
No. 112
Debit
Credit
1,053.00
936.00
1,053.00
1,989.00
500.00 1,489.00
035.10 1,453.90
2,623.90
1,200.00 1,423.90
1,170.00
GST Recoverable
Date
Balance
Balance
No. 114
Ref.
J1
J1
J1
J1
J1
5-54
Debit
Credit
42.00
21.00
49.00
2.80
3.50
Balance
42.00
39.20
60.20
109.20
105.70
Explanation
1
4
6
8
10
11
14
15
17
18
27
30
Balance
No. 120
Ref.
J1
J1
J1
J1
J1
J1
J1
J1
J2
J2
J2
Debit
Credit
600.00
60.00
630.00
40.00
300.00
700.00
50.00
70.00
560.00
25.00
730.00
Accounts Payable
Date
Apr.
Explanation
4
10
14
29
Apr.
Ref.
J1
J1
J1
J2
Debit
Credit
Balance
642.00
42.80
599.20
642.00
599.20
749.00 1,348.20
749.00
No. 214
Explanation
8
18
27
30
3,500.00
4,100.00
4,160.00
3,530.00
3,490.00
3,790.00
4,490.00
4,440.00
4,510.00
3,950.00
3,975.00
3,245.00
No. 201
GST Payable
Date
Balance
Ref.
J1
J2
J2
J2
5-55
Debit
Credit
63.00
56.00
2.10
70.00
Balance
63.00
119.00
116.90
186.90
PST Payable
Date
Apr.
No. 215
Explanation
8
18
27
30
Ref.
J1
J2
J2
J2
Debit
Credit
90.00
80.00
3.00
100.00
B. J. Evert, Capital
Date
Apr.
Explanation
1
Balance
Ref.
Debit
Credit
Balance
6,000.00
No. 401
Date
Explanation
8
18
30
Ref.
Debit
J1
J2
J2
Credit
Date
Explanation
Apr. 27
No. 412
Ref.
J2
Debit
Credit
030.00
Explanation
8
18
27
30
Balance
0,030.00
Balance
900.00 0,900.00
800.00 1,700.00
1,000.00 2,700.00
Apr.
90.00
170.00
167.00
267.00
No. 301
Sales
Apr.
Balance
No. 505
Ref.
J1
J2
J2
J2
5-56
Debit
630.00
560.00
730.00
Credit
Balance
0,630.00
1,190.00
25.00 1,165.00
1,895.00
Credit
$ 749.00
186.90
267.00
6,000.00
02,700.00
00000000
$9,902.90
(d)
B. J.'S TENNIS SHOP
Income Statement (Partial)
For the Month Ended April 30, 2003
Sales revenues
Sales........................................................................................
Less: Sales returns and allowances....................................
Net sales..................................................................................
Cost of goods sold.........................................................................
Gross profit.....................................................................................
5-57
$2,700
30
2,670
1,895
775
*PROBLEM 5-11A
(a)
METIS WHOLESALE COMPANY
Work Sheet
For the Year Ended December 31, 2002
Account Titles
Trial Balance
Dr.
Cash
33,400
Accounts Receivable
37,600
Merchandise Inventory
92,400
Land
92,000
Buildings
197,000
Accum. Amortization
Equipment
83,500
Accum. Amortization
Notes Payable
Accounts Payable
G. Metis, Capital
G. Metis, Drawings
10,000
Sales
Cost of Goods Sold
712,100
Salaries Expense
69,800
Utilities Expense
9,400
Repair Expense
5,900
Gas and Oil Expense
7,200
Insurance Expense
0,00 3,500
Totals
1,353,800
Amort. ExpenseBldings
Amort. Expense Equip.
Interest Expense
Interest Payable
Totals
Net Income
Totals
Adjustments
Cr.
Dr.
Cr.
(3) 2,400
54,000
Adjusted
Trial Balance
Dr.
Income
Statement
Cr.
Dr.
Balance Sheet
Cr.
33,400
37,600
90,000
92,000
197,000
(1) 10,000
Dr.
33,400
37,600
90,000
92,000
197,000
64,000
64,000
83,500
42,400
50,000
37,500
267,800
(1) 9,000
83,500
51,400
50,000
37,500
267,800
51,400
50,000
37,500
267,800
10,000
902,100
10,000
902,100
902,100
(3) 2,400
714,500
69,800
9,400
5,900
7,200
3,500
714,500
69,800
9,400
5,900
7,200
3,500
(1) 10,000
(1) 9,000
(2) 4,000
000000
0025,400
10,000
9,000
4,000
(2) 04,000 00000000
25,400 1,376,800
10,000
9,000
4,000
0000000
0833,300
068,800
902,100
00000000
1,353,800
0,004,000
1,376,800
0000000
902,100
0000000
00902,100
0000000
543,500
0000000
543,500
Key: (1) Amortization expensebuildings, (1) Amortization expenseequipment, (2) Interest payable., (3) Inventory adjustment.
5-58
Cr.
004,000
474,700
068,800
543,500
5-59
$ 33,400
37,600
90,000
161,000
Capital assets
Land............................................................
$ 92,000
Buildings..................................................... $197,000
Less: Accumulated amortization.............. (64,000) 133,000
Equipment..................................................
83,500
Less: Accumulated amortization.............. (51,400)
32,100 257,100
Total assets........................................................................... $418,100
Liabilities and Owners Equity
Current liabilities
Notes payable................................................................................ $ 50,000
Accounts payable.........................................................................
37,500
Interest payable.............................................................................
4,000
Total liabilities.......................................................................
91,500
Owners Equity
G. Metis Capital.............................................................................
326,600
Total liabilities and owners equity..................................... $418,100
5-60
(d)
10,000
Amortization ExpenseEquipment.....
Accum. Amortiz.Equipment.......
9,000
9,000
Interest Expense..................................
Interest payable............................
4,000
2,400
4,000
2,400
902,100
714,500
69,800
9,400
5,900
7,200
3,500
10,000
9,000
4,000
G. Metis, Capital..................................
G. Metis, Drawings.......................
5-61
10,000
10,000
Cash ...............................................................
Accounts Receivable....................................
Merchandise Inventory.................................
Land...............................................................
Buildings........................................................
Accumulated AmortizationBuildings.......
Equipment.....................................................
Accumulated AmortizationEquipment....
Notes Payable...............................................
Accounts Payable.........................................
Interest Payable............................................
G. Metis, Capital............................................
Totals
5-62
Debit
$ 33,400
37,600
90,000
92,000
197,000
Credit
$ 64,000
83,500
00000 00
$533,500
51,400
50,000
37,500
4,000
326,600
$533,500
PROBLEM 5-1B
(a)
June 5
13
17
44,000
Merchandise InventorySkiffs
(2 x $25,000)...................................................
Accounts Payable.................................
50,000
22
23
24
50,000
18
44,000
Merchandise InventorySkiffs
(2 x $26,000)...................................................
Accounts Payable.................................
88,000
88,000
52,000
52,000
Accounts Payable.........................................
Merchandise InventorySkiffs..............
26,000
66,000
54,000
87,000
72,000
5-63
106,000
26,000
66,000
54,000
87,000
72,000
Merchandise Inventory
Skiffs
Bal. 72,000
26,000
50,000
72,000
52,000
76,000
Merchandise Inventory
Power
Bal. 54,000
54,000
0
5-64
PROBLEM 5-2B
GENERALJOURNAL
Date
Account Titles
June 1
650
50
1,400
840
50
600
15
Cash............................................................. 101
Accounts Receivable.......................... 112
1,400
17
1,200
682
20
600
24
Cash............................................................. 101
Accounts Receivable.......................... 112
1,200
5-65
Ref. Debit
Credit
650
50
1,400
840
50
600
1,400
1,200
682
600
1,200
Account Titles
June 26
600
28
1,100
609
150
75
30
Ref. Debit
5-66
Credit
600
1,100
609
150
75
PROBLEM 5-3B
(a)
GENERAL JOURNAL
Date
May
J1
Ref.
Debit
1 Merchandise Inventory...............................120
Accounts Payable...............................201
5,000
2 Accounts Receivable..................................112
Sales.....................................................401
4,000
505
Cost of Goods Sold....................................120
Merchandise Inventory.......................
3,000
5 Accounts Payable.......................................201
Merchandise Inventory.......................120
0,200
7 Freight Out..................................................644
Cash.....................................................101
200
11 Supplies.......................................................126
Cash.....................................................101
0,900
12 Merchandise Inventory...............................120
Cash.....................................................101
2,400
15 Cash.............................................................101
Merchandise Inventory.......................120
0,230
17 Merchandise Inventory...............................120
Accounts Payable...............................201
1,900
19 Merchandise Inventory...............................120
Cash.....................................................101
0,250
5-67
Credit
5,000
4,000
3,000
0,200
200
0,900
2,400
0,230
1,900
0,250
Ref.
Debit
May 24 Cash.........................................................
Sales................................................
101
401
6,200
505
120
4,340
25 Merchandise Inventory..........................
Accounts Payable...........................
120
201
1,000
27 Cash ........................................................
Accounts Receivable......................
101
112
4,000
0,0
412
101
0,100
Merchandise Inventory..........................
Cost of Goods Sold........................
120
505
70
201
101
4,800
31 Accounts Receivable.............................
Sales................................................
112
401
1,600
505
120
1,000
5-68
Credit
6,200
4,340
1,000
4,000
0,100
70
4,800
1,600
1,000
Cash
No. 101
Date
May
Explanation
1
7
11
12
15
19
24
27
29
30
Balance
Ref.
J1
J1
J1
J1
J1
J2
J2
J2
J2
Debit
Credit
200
900
2,400
230
250
6,200
4,000
100
4,800
Accounts Receivable
Date
May
Explanation
2
27
31
Ref.
J1
J2
J2
May
Explanation
1
2
5
12
15
17
19
24
25
29
31
5,000
4,800
3,900
1,500
1,730
1,480
7,680
11,680
11,580
6,780
No. 112
Debit
Credit
4,000
4,000
1,600
Merchandise Inventory
Date
Balance
Balance
04,000
00,000
01,600
No. 120
Ref.
J1
J1
J1
J1
J1
J1
J1
J2
J2
J2
J2
5-69
Debit
Credit
5,000
3,000
200
2,400
230
1,900
250
4,340
1,000
70
1,000
Balance
5,000
2,000
1,800
4,200
3,970
5,870
6,120
1,780
2,780
2,850
1,850
No. 126
Explanation
May 11
Ref.
J1
Debit
Credit
0,900
00,900
Accounts Payable
Date
May
Explanation
1
5
17
25
30
No. 201
Ref.
J1
J1
J1
J2
J2
Debit
Credit
May
Explanation
1
Balance
0,200
1,900
1,000
4,800
05,000
04,800
6,700
7,700
2,900
No. 301
Ref.
Debit
Credit
Balance
05,000
Sales
No. 401
Date
May
Balance
5,000
S. Eagle, Capital
Date
Balance
Explanation
2
24
31
Ref.
Debit
J1
J2
J2
Credit
4,000
6,200
1,600
Explanation
Balance
04,000
10,200
11,800
No. 412
Ref.
J2
5-70
Debit
0,100
Credit
Balance
00,100
No. 505
Explanation
2
24
29
31
Ref.
J1
J2
J2
J2
Debit
Credit
3,000
4,340
1,000
70
Freight Out
Date
May
(c)
03,000
07,340
07,270
8,270
No. 644
Explanation
7
Balance
Ref.
J1
Debit
0,200
Credit
Balance
00,200
(d)
PROBLEM 5-4B
Adjusting entriesnot required:
Dec. 31
(a)
100
Insurance Expense...................................................
Prepaid Insurance.............................................
900
Amortization Expense..............................................
Accumulated AmortizationBuilding.............
4,000
Amortization Expense..............................................
Accumulated AmortizationStore Equipment
2,850
6,000
100
900
4,000
2,850
GLOBAL ENTERPRISES
Income Statement
For the Year Ended December 31, 2002
Sales revenues
Sales............................................................................. $243,700
Less: Sales returns and allowances......................... 4 4,800
Net sales.......................................................................
238,900
Cost of goods sold ($180,300 + $100)...............................
180,400
Gross profit .......................................................................
58,500
Operating expenses
Salaries expense......................................$31,600
Utilities expense...................................... 5,100
Amortization expense ($4,000 + $2,850)
6,850
Property tax expense ............................. 6,000
Insurance expense .................................
900
Total operating expenses...............................
50,450
Net income........................................................................... $ 8,050
5-72
6,000
$50,000
8,050
$58,050
5-73
$ 13,000
31,700
28,000
1,000
73,700
Capital assets
Land..........................................................
$ 30,000
Building.................................................... $150,000
Less: Accumulated amortization
Building ($18,750 + $4,000)...................
22,750
127,250
Store equipment...................................... $45,000
Less: Accumulated amortization
Store Equipment ($9,100 + $2,850)......
11,950
33,050 190,300
Total assets.......................................................................... $264,000
Liabilities and Owner's Equity
Current liabilities
Accounts payable.......................................................................
Sales taxes payable....................................................................
Property tax payable...................................................................
Current portion of mortgage payable........................................
Total current liabilities................................................................
$ 34,700
4,000
6,000
5,000
49,700
Long-term liabilities
Mortgage payable........................................................................
Total liabilities......................................................................
156,250
205,950
Owner's equity
T. Brown, Capital.........................................................................
Total liabilities and owner's equity....................................
58,050
$264,000
5-74
Sales.............................................................
T. Brown, Capital.................................
243,700
T. Brown, Capital.........................................
Sales Returns and Allowances..........
Cost of Goods Sold.............................
Salaries Expense.................................
Utilities Expense.................................
Insurance Expense.............................
Property Tax Expense.........................
Amortization Expense.........................
235,650
5-75
243,700
4,800
180,400
31,600
5,100
900
6,000
6,850
PROBLEM 5-5B
(a)
Sales revenues
Sales...........................................................................................
Less: Sales returns and allowances......................................
Net sales....................................................................................
Cost of goods sold...........................................................................
Gross profit.......................................................................................
Operating expenses
Selling expenses
Sales salaries expense.....................
$76,000
Sales commissions expense............
15,500
Amortization expense equipment
13,300
Utilities expense ($11,000 X 60%)....
6,600
Insurance expense ($7,200 X 60%). . 000 4,320
Total selling expenses...............
$115,720
Administrative expenses
Office salaries expense....................
$32,000
Amortization expense building. . .
10,400
Property taxes expense....................
4,800
Utilities expense ($11,000 X 40%)....
4,400
Insurance expense ($7,200 X 40%). . 000 2,880
Total administrative expenses
0054,480
Total operating expenses
Income from operations.....................................................
Other revenues and gains
Interest revenue..........................................................
$ 4,000
Other expenses and losses
Interest expense..........................................................
11,000
Net income..........................................................................
5-76
$624,000
8,000
616,000
427,200
188,800
0 170,200
18,600
00 07,000
$ 11,600
5-77
$226,600
0 11,600
238,200
0 28,000
$210,200
$023,000
50,300
72,500
0 2,400
148,200
0254,600
$402,800
5-78
$089,300
20,000
4,800
4,500
0008,000
00 06,000
132,600
00 60,000
192,600
0210,200
$402,800
Amortization ExpenseBuilding.....................10,400
Accumulated AmortizationBuilding.....
10,400
Amortization ExpenseEquipment.................13,300
Accumulated AmortizationEquipment.
13,300
7,200
Interest Expense..................................................8,000
Interest Payable.........................................
8,000
4,800
4,500
2,500
5-79
31
31
Sales............................................................... 624,000
Interest Revenue...........................................
4,000
S. Veitch, Capital...................................
628,000
427,200
8,000
32,000
76,000
15,500
4,800
11,000
10,400
13,300
7,200
11,000
S. Veitch, Capital...........................................
S. Veitch, Drawings...............................
5-80
28,000
28,000
PROBLEM 5-6B
Account
Statement
Classification
Accumulated Depreciation
Balance Sheet
Capital Assets
(Contra Account)
Balance Sheet
Current Assets
Cost of Sales
Income Statement
Depreciation Expense
Income Statement
Operating Expenses
(Administrative
Expenses)
Income Statement
Interest Expense
Income Statement
Other Expenses
InventoriesAluminum
Balance Sheet
Current Assets
InventoriesOther Supplies
Balance Sheet
Current Assets
InventoriesRaw Materials
Balance Sheet
Current Assets
Operating Income
Income Statement
Operating Income
Other Expenses
Income Statement
Other Expenses
Payables
Balance Sheet
Current Liabilities
Balance Sheet
Capital Assets
Receivables
Balance Sheet
Current Assets
Sales
Income Statement
Revenue
Income Statement
Operating Expenses
5-81
General Expenses
5-82
(a)
PROBLEM 5-7B
TAO COMPANY
Income Statement
For the Year Ended December 31, 2002
Sales revenues
Sales ($702,000 - $10,000).......................................................
Less: Sales returns and allowances......................................
Net sales...................................................................................
Cost of goods sold..........................................................................
Gross profit......................................................................................
Operating expenses
Selling expenses
Sales salaries expense...................
$76,000
Freight out.......................................
17,200
Advertising expense.......................
10,000
Amortization expensestore equip. 7,500
Sales commissions expense
($6,500 + $1,000).........................
7,500 $118,200
Administrative expenses
Office salaries expense.................. $19,000
Rent expense ($16,000 - $1,250)....
14,750
Utilities expense..............................
8,000
Insurance expense ($7,000 - $1,200) 5,800
47,550
Total operating expenses...........
Income from operations...................................................
Other revenues and gains
Interest revenue........................................................
$5,300
Other expenses and losses
Interest expense........................................................
4,000
Net income........................................................................
Reconciliation
Net Income as prepared by bookkeeper.........................................
Sales revenue unearned..................................................................
Insurance expense applicable to 2003............................................
Rent expense applicable to 2003.....................................................
Sales commission expense applicable to 2002.............................
Drawings............................................................................................
5-83
$692,000
4,100
687,900
470,000
217,900
165,750
52,150
1,300
$ 53,450
$50,000
(10,000)
1,200
1,250
(1,000)
12,000
As adjusted.......................................................................................
5-84
$53,450
TAO COMPANY
Income Statement
For the Year Ended December 31, 2002
Revenues
Net sales...............................................................
Interest revenue...................................................
Total revenue................................................
Expenses
Cost of goods sold..............................................
Selling expenses (1)............................................
Administrative expenses (2)...............................
Interest expense...................................................
Total expenses..............................................
Net income...................................................................
$687,900
5,300
$470,000
118,200
47,550
4,000
$ 76,000
17,200
10,000
7,500
7,500
$118,200
$19,000
14,750
8,000
5,800
$47,550
Reconciliation
Net income as prepared by bookkeeper............................................
Sales revenue unearned.....................................................................
Insurance expense applicable to 2003..............................................
Rent expense applicable to 2003.......................................................
Sales commission expense applicable to 2002................................
Drawings..............................................................................................
As adjusted..........................................................................................
5-85
$693,200
639,750
$53,450
$50,000
(10,000)
1,200
1,250
(1,000)
12,000
$53,450
PROBLEM 5-8B
(a)
8 Months Ended
December 31, 1999
Gross profit margin
Inventory turnover
85.3%
57.1%
($74,314 $10,931)
$74,314
1.64 times
0.25 times
$10,931 [($4,966 +
$8,330) 2]
Current ratio
Year Ended
April 30 1999
1,460 days
1.42:1
1.15:1
$1,973,457 $1,390,850
$298,499 $259,851
(b) SAMs current ratio of more than 1 to 1 indicates that SAM does not
have a liquidity problem. Its current assets are more than its current
liabilities. It appears to managing inventory better in its second year of
operations, with a substantial reduction of days sales in inventory. The
inventory ratios for the year ended April 1999 are probably reflective of
the start up phase of the company.
5-86
*PROBLEM 5-9B
GENERAL JOURNAL
Date
Oct.
Ref.
Debit
Credit
1 GST Recoverable..............................................................
5,250
Merchandise Inventory.....................................................
75,000
Accounts Payable.....................................................
80,250
3 Merchandise Inventory.....................................................
01,800
Cash...........................................................................
01,800
5 Accounts Payable.............................................................
06,420
Merchandise Inventory.............................................
GST Recoverable......................................................
06,000
420
8 Accounts Receivable........................................................
24,640
Sales...........................................................................
GST Payable..............................................................
PST Payable...............................................................
22,000
1,540
1,100
16,000
12 GST Recoverable..............................................................
350
Supplies ($5,000 + $250)..................................................
5,250
Cash...........................................................................
05,600
15 GST Recoverable..............................................................
350
Merchandise Inventory.....................................................
5,000
Cash...........................................................................
05,350
18 Accounts Receivable........................................................
33,600
Sales...........................................................................
GST Payable (7% x $ 30,000)....................................
PST Payable (5% x $ 30,000)....................................
30,000
2,100
1,500
23,000
5-87
Ref.
Debit
Credit
049,280
0
73,830
27 Cash...................................................................................
24,640
Accounts Receivable................................................
00,
24,640
5-88
*PROBLEM 5-10B
(a)
GENERAL JOURNAL
Date
May
J1
Ref.
Debit
49.00
700.00
055.00
936.00
600.00
048.15
28.00
400.00
42.00
600.00
075.00
21 Cash............................................................ 101
Merchandise Inventory...................... 120
GST Recoverable............................... 114
058.85
5-89
Credit
749.00
055.00
800.00
56.00
80.00
600.00
045.00
3.15
428.00
642.00
075.00
055.00
3.85
J2
Ref.
Debit
1,053.00
675.00
25 Cash............................................................ 101
Accounts Receivable......................... 112
400.00
2.45
3.50
35.00
25.00
700.85
1,755.00
1,125.00
Credit
900.00
63.00
90.00
675.00
400.00
040.95
25.00
700.85
1,500.0
0
105.00
150.00
1,125.00
31 Cash............................................................ 101
Accounts Receivable......................... 112
5-90
800.00
800.00
Cash
No. 101
Date
May
Explanation
1
6
14
18
21
23
25
29
31
Balance
Ref.
J1
J1
J1
J1
J2
J2
J2
J2
Debit
Credit
May
Explanation
8
25
27
30
31
3,000.00
2,945.00
2,517.00
2,442.00
2,500.85
3,553,85
3,953.85
3,253.00
4,053.00
055.00
428.00
075.00
058.85
1,053.00
400.00
700.85
800.00
Accounts Receivable
Date
Balance
No. 112
Ref.
J1
J2
J2
J2
J2
Debit
Credit
936.00
936.00
400.00
536.00
0440.95
495.05
2,250.05
800.00 1,450.05
1,755.00
GST Recoverable
Date
May
Explanation
4
9
14
16
21
Balance
No. 114
Ref.
J1
J1
J1
J1
J1
5-91
Debit
Credit
49.00
3.15
28.00
42.00
3.85
Balance
49.00
45.85
73.85
115.85
112.00
Explanation
1
4
6
8
9
14
16
18
21
23
27
30
Balance
No. 120
Ref.
J1
J1
J1
J1
J1
J1
J1
J1
J2
J2
J2
Debit
Credit
May
Explanation
4
9
16
29
1,850.00
2,550.00
2,605.00
2,005.00
1,960.00
2,360.00
2,960.00
3,035.00
2,980.00
2,305.00
2,330.00
1,205.00
700.00
55.00
600.00
45.00
400.00
600.00
75.00
55.00
675.00
25.00
1,125.00
Accounts Payable
Date
Balance
No. 201
Ref.
J1
J1
J1
J2
Debit
Credit
749.00
48.15
700.85
749.00
700.85
642.00 1,342.85
642.00
GST Payable
Date
May
No. 214
Explanation
8
23
27
30
Balance
Ref.
J1
J2
J2
J2
5-92
Debit
Credit
56.00
63.00
2.45
105.00
Balance
56.00
119.00
116.55
221.55
No. 215
Explanation
8
23
27
30
Ref.
J1
J2
J2
J2
Debit
Credit
80.00
90.00
3.50
150.00
J. Nejedly, Capital
Date
May
Explanation
1
Balance
Ref.
Debit
Credit
Balance
4,850.00
No. 401
Date
Explanation
8
23
30
Ref.
Debit
J1
J2
J2
Credit
Date
Explanation
May 27
No. 412
Ref.
J2
Debit
Credit
035.00
Explanation
8
23
27
30
Balance
0,035.00
Balance
800.00 800.00
900.00 1,700.00
1,500.00 3,200.00
May
80.00
170.00
166.50
316.50
No. 301
Sales
May
Balance
No. 505
Ref.
J1
J2
J2
J2
5-93
Debit
600.00
675.00
1,125.00
Credit
Balance
0,600.00
1,275.00
25.00 1,250.00
2,375.00
Credit
$ 642.00
221.55
316.50
4,850.00
03,200.00
00000000
$9,230.05
(d)
JANA'S TENNIS SHOP
Income Statement (Partial)
For the Month Ended May 31, 2003
Sales revenues
Sales.......................................................................................
Less: Sales returns and allowances...................................
Net sales.................................................................................
Cost of goods sold........................................................................
Gross profit....................................................................................
5-94
$3,200
35
3,165
2,375
790
*PROBLEM 5-11B
(a)
Trial Balance
Dr.
Cash
Accounts Receivable
Merchandise Inventory
Store Supplies
Land
Building
Accumulated Amortization
Delivery Equipment
Accumulated Amortization
Mortgage Payable
Accounts Payable
Sales Taxes Payable
L. Brennan, Capital
L. Brennan, Drawings
Sales
Sales Returns and Allow.
Cost of Goods Sold
Salaries Expense
Advertising Expense
Utilities Expense
Repair Expense
Delivery Expense
Rent Expense
Totals
Supplies Expense
Amort. ExpenseBldg.
Amort. ExpenseEquip.
Interest Expense
Interest Payable
Property Tax Expense
Property Tax Payable
Totals
Net Loss
Totals
Adjustments
Cr.
Dr.
16,700
40,700
48,000
5,500
60,000
85,000
(4) 3,000
(1) 2,000
17,000
Dr.
Cr.
Dr.
Balance Sheet
Cr.
Dr.
16,700
40,700
45,000
3,500
60,000
85,000
(2) 4,250
48,000
Income Statement
16,700
40,700
45,000
3,500
60,000
85,000
21,250
21,250
48,000
16,000
51,000
48,500
7,000
161,000
(2) 8,000
12,000
48,000
24,000
51,000
48,500
7,000
161,000
24,000
51,000
48,500
7,000
161,000
12,000
750,300
12,000
750,300
4,200
497,500
(4)
140,000
26,400
14,000
12,100
16,700
24,000
00000000
1,050,800 0,01,050,800
(1)
(2)
(2)
(3)
3,000
2,000
4,250
8,000
4,000
(3) 4,000
(5) 5,000
000000
26,250
(5) 05,000
26,250
5-95
Cr.
750,300
4,200
500,500
140,000
26,400
14,000
12,100
16,700
24,000
4,200
500,500
140,000
26,400
14,000
12,100
16,700
24,000
2,000
4,250
8,000
4,000
0,
5,000
00000000
1,072,050
2,000
4,250
8,000
4,000
4,000
0,005,000
1,072,050
4,000
5,000
00000 0
761,150
00 0000
761,150
0000000
750,300
010,850
761,150
0000000
310,900
00010,850
321,750
005,000
321,750
0000000
321,750
5-96
5-97
$750,300
4,200
746,100
500,500
245,600
0 252,450
6,850
00 04,000
$ 10,850
5-98
$161,000
$10,850
12,000
22,850
$138,150
$ 16,700
40,700
3,500
45,000
105,900
Capital assets
Land..........................................................
$60,000
Building....................................................
$85,000
Less: Accumulated amortization............
21,250
63,750
Equipment................................................
$48,000
Less: Accumulated amortization............
24,000
24,000 147,750
Total assets............................................................................ $253,650
Liabilities and Owners Equity
Current liabilities
Accounts payable......................................................................... $ 48,500
Sales taxes payable......................................................................
7,000
Property tax payable.....................................................................
5,000
Interest payable.............................................................................
4,000
Current portion of mortgage payable..........................................
30,000
Total current liabilities..........................................................
94,500
Long-term liabilities
Mortgage payable.........................................................................
Total liabilities.......................................................................
21,000
115,500
Owners Equity
L. Brennan, Capital.......................................................................
138,150
Total liabilities and owners equity...................................... $253,650
5-99
(d)
Nov. 30
Nov. 30
2,000
Amortization ExpenseBuilding......
Accum. Amortiz.Building.........
4,250
Amortization ExpenseEquipment. .
Accum. Amortiz.Equipment.....
8,000
3,000
Interest Expense...............................
Interest payable..........................
4,000
5,000
Sales..................................................
L. Brennan, Capital....................
750,300
2,000
4,250
8,000
3,000
4,000
5,000
750,300
5-100
500,500
140,000
26,400
14,000
12,100
16,700
24,000
4,250
8,000
4,000
5,000
2,000
4,200
12,000
12,000
Cash..............................................................
Accounts Receivable...................................
Merchandise Inventory................................
Store Supplies..............................................
Land...............................................................
Building .........................................................
Accumulated AmortizationBuilding........
Equipment.....................................................
Accumulated AmortizationEquipment....
Mortgage Payable.........................................
Accounts Payable........................................
Property Tax Payable...................................
Sales Taxes Payable....................................
Interest Payable............................................
L. Brennan, Capital.......................................
Totals
5-101
Debit
$ 16,700
40,700
45,000
3,500
60,000
85,000
Credit
$ 21,250
48,000
00 00000
$298,900
24,000
51,000
48,500
5,000
7,000
4,000
138,150
$298,900