Work4Me I Accounting Simulations. Problem Seven

Transcription

1 Work4Me I Accounting Simulations 3 rd Web-Based Edition Problem Seven Uptight Tools, Inc. Accounting for Accounts Receivable and Merchandise Inventory using a Perpetual Inventory System Page 1

2 UPTIGHT TOOLS, INCORPORATED CHART OF ACCOUNTS Problem 7 ASSETS REVENUE 101 Cash 401 Tools and Accessory Sales 105 Accounts Receivable 402 Sales Returns and Allowances 109 Notes Receivable 403 Sales Discounts 113 Interest Receivable 115 Merchandise Inventory COST OF GOODS SOLD 121 Prepaid Insurance 123 Prepaid Rent 501 Cost of Goods Sold 125 Prepaid Advertising 127 Store Supplies OPERATING EXPENSES 129 Office Supplies 131 Store Equipment and Fixtures 601 Salaries and Wages Expense 132 Accum. Depre., Store Equip. and Fix. 602 Store Supplies Expense 135 Office Equipment 603 Office Supplies Expense 136 Accum. Depre., Office Equipment 604 Advertising Expense 139 Delivery Vehicles 606 Delivery Expense 140 Accum. Depre., Delivery Vehicles 608 Vehicle Operating Expense 150 Land 610 Depre. Exp., Store Equip. and Fix. 611 Depre. Exp., Office Equip. LIABILITIES 6125 Depre. Exp., Delivery Vehicles 621 Rent Expense 201 Accounts Payable 622 Insurance Expense 203 Short-Term Notes Payable 623 Professional Services Expense 205 Sales Tax Payable 624 Electric and Gas Expense 209 Salaries & Wages Payable 625 Telephone Expense 212 Dividends Payable 626 Property Tax Expense 215 Interest Payable 627 Bank Service Charges 218 Property Tax Payable 629 Miscellaneous Expense 221 Revenue Received In Advance 231 Income Taxes Payable OTHER REVENUE 251 Long-Term Notes Payable 711 Interest Earned STOCKHOLDERS EQUITY OTHER EXPENSES 301 Common Stock 305 Retained Earnings 811 Interest Expense 310 Cash Dividends Declared 821 Income Taxes Expense INCOME SUMMARY 901 Income Summary Page 2

3 Uptight Tools, Inc. Customer List Customer Number Customer Alex Anderson Bob s Auto Repair Clinker s Plumbing Folsom School Dist Marshal Motors Kathy Taylor Robert Wise Ernie Young Uptight Tools, Inc. Vendor List Vendor Number Vendor Bart s Supply Boot Hill Tools Deadwood Equipment Goodman Freight, Inc Honker Brothers Locker and Sons, Inc Mosetti and Company Videcamper Saws Page 3

4 Problem 7 UPTIGHT TOOLS, INCORPORATED ACCOUNTING FOR ACCOUNTS RECEIVABLE, AND MERCHANDISE INVENTORY USING A PERPETUAL INVENTORY SYSTEM Uptight Tools, Incorporated, is a wholesaler selling products to a variety of retail customers. No sales tax is required when sales are made at wholesale to retailers who will then sell direct to retail customers. All sales made to retail customers are on account (on credit). Credit terms of 2/15, n/30 are extended to all customers by Uptight Tools, Incorporated. Customers who pay their obligations within the discount period, (15 days) are given a 2% reduction (Sales Discount) on the balance due for the merchandise. Uptight Tool, Incorporated is located in a state that does not collect sales taxes. In this problem, sales tax will not be a part of any sales or sales return transaction. 1. Go to select Work4Me, and log in. Select Problem 7, Accounts Receivable with Perpetual Inventory and click. 2. Using the Chart of Accounts and Customer List and Vendor List for Uptight Tools, Incorporated, journalize, verify, and post the December sales and related transactions for Uptight Tools, Incorporated. 3. It is important to remember that when a perpetual inventory system is used by the business, two journal entries are required for each product sales transaction. A. First, the sales entry must be recorded, with a debit to Account Receivable (Cash or Notes Receivable) and a credit to Sales. B. This is immediately followed by a second entry debiting the Cost of Goods (Merchandise) Sold account and crediting the Merchandise Inventory account. Page 4

5 TRANSACTIONS FOR DECEMBER 1-31 December 1 Sold an assortment of tools, on credit to Customer Alex Anderson (customer number 10350), proprietor of Anderson Supply. Sales invoice number U2002 totals $4,550. Shipping terms on this sale are FOB Shipping Point. Remember that all credit sales offer terms of 2/15, net 30. (Remember, No Sales Tax in this problem.) The cost of the merchandise sold to Anderson Supply was $2,275. ALL SALES TRANSACTIONS REQUIRE TWO JOURNAL ENTRIES! Student Analysis December 4 Sold on credit to Marshal Motors (customer number 10900), tools and parts totaling $14,500. The merchandise sold cost Uptight Tools $7,250. The sales invoice for this transaction is U2003. Shipping terms for all sales over $12,000 are FOB Destination. The shipping charges will be paid later to a private carrier. Two journal entries are required! December 5 Received a check for $9,800 as payment in full of the November 20 invoice totaling $10,000. Clinker s Plumbing (10760) is paying invoice number U1998 within the discount period. December 7 Issued credit memo CM202 to Marshal Motors (10900) for $900 worth of merchandise returned. The goods returned cost Uptight Tools $450. The invoice number on this earlier shipment was U2003. Two journal entries are required! December 8 Received a check as payment in full of the November 24 invoice from customer Robert Wise (11330). The $25,500 invoice on this sale was number U2000. Remember, the wholesale division of Uptight Tools offers credit terms of 2/15, n/30 to all retail customers. Page 5

6 TRANSACTIONS FOR DECEMBER, 1-31 December 12 Issued check number for $356 as payment in full of freight invoice D3333, received today from Daly Freight Company. Daly Freight Company makes most of the local customer deliveries of merchandise for Uptight Tools. Student Analysis December 16 Received payment in full of invoice U2002 from customers Alex Anderson (10350). The sale was made to Mr. Anderson on December 1. Remember 2/15, n/30 terms are extended to all Uptight Tools, Incorporated, and customers. December 19 Received payment in full of invoice U2003 from Marshal Motors (10900). Be sure to note sale entry of December 4 and the credit memo (CM202) of December 7. December 21 Sold on credit to Ernie Young (customer 11475), tools totaling $17,600. The sales invoice for this transaction is U2004. Shipping terms for all sales over $12,000 are FOB Destination. The shipping charges will be paid later to a private carrier. The merchandise sold to Mr. Young cost Uptight Tools $8,800. December 27 Received a check for $11,000 as payment in full of the November 27 invoice (U2001) from Kathy Taylor (customer 11250). December 31 Issued credit memo CM203 to Ernie Young (11475) for $500 worth of merchandise returned today. The sales invoice number on the December 21 sale was U2004. The items returned cost Uptight Tools $250. Page 6

7 Now that you have completed the December transactions, it is time to check the accuracy of your work. Carefully check your Trial Balance totals against the balances shown in the Check It Out box below. If all of your totals match the check figures, you are ready to print the selected documents that are listed below the Check It Out box. If any of your account totals do not match the check figures, make the necessary corrections before you print the required documents. CHECK IT OUT 101 Cash $82, Accounts Receivable 23, Accounts Payable 3, Tools and Accessories Sales 137, Sales Returns and Allowances 4, Sales Discounts 1, Cost of Goods Sold 90, Delivery Expense 1, TRIAL BALANCE TOTAL $338, When your totals match the Check It Box totals: 1. Print the Trial Balance for the period ended December Print the General Ledger cards for: 101 Cash 105 Accounts Receivable 115 Merchandise Inventory 501 Cost of Goods Sold 3. Move the pointer to Journals/Ledgers/Statements in the Menu Bar, down to Subsidiary Ledgers and over to Accounts Receivable Ledger. Print the document. 4. Click on the All Customers button and print all of the customer accounts. Using your printed documents, answer the analysis questions for Problem 7. Page 7

8 WORK4ME I - PROBLEM SEVEN NAME ACCOUNTS RECEIVABLE CLASS DAY AND TIME DATE PERPETUAL INVENTORY 1. The issuance of a credit memo requires that the Sales Returns and Allowances account be debited. Answer only T for True or F for False for questions A sale of merchandise on credit requires that a debit entry be recorded to the Accounts Payable account. 3. The Schedule of Accounts Receivable is a list of all of the customers and the balance owed by each customer. 4. Accounts Receivable and Accounts Payable are also known as control accounts. 5. Cash terms of 3/10, net 60 means that the balance of the invoice must paid within 60 days of the invoice date to qualify for the discount. 6. How many customers have an outstanding balance owed to Uptight Tools, Incorporated? A. 1 B. 2 C. 3 D. 4 E. None of the above. 7. List by number, the customer that has the largest balance due on December 31? Customer Number 8. What is the current balance owned by customer Ernie Young? $ 9. List by number, the customer who has an overdue balance (a balance that is past the net 30-day period). 10. What was the additional cost to Kathy Taylor when she paid Invoice U2001 after the discount period? 11. How many issued checks are shown on the Cash ledger card? A. 1 B. 2 C. 3 D. 4 E. None of the above. Customer Number $ Page 8

9 12. How many credit memos are shown on the Accounts Receivable ledger card? A. 1 B. 2 C. 3 D. 4 E. None of the above. 13. Has the balance of the Merchandise Inventory account increased or decreased during December? A. Increased B. Decreased C. Not Changed 14. Has the balance of the Cost of Goods Sold increased or decreased during December? A. Increased B. Decreased C. Not Changed 15. After the final entry on December 31, what is the correct total for Net Sales? $ Page 9