Supplemental Instruction Handouts Financial Accounting Answer Key for Final Review of Chapters 5, 6, 7 & Appendix II

Transcription

1 Supplemental Instruction Handouts Financial Accounting Answer Key for Final Review of Chapters 5, 6, 7 & Appendix II 1. Page 2_ June 1 Merchandise Inventory 2,500 Payable Dave s Wholesalers 2,500 June 2 Merchandise Inventory 150 Cash 150 June 3 Cash 500 Sales 500 June 3 Cost of Goods Sold 250 Merchandise Inventory 250 June 5 Receivable Mrs. Burns 750 Sales 750 June 5 Cost of Goods Sold 450 Merchandise Inventory 450 June 6 Delivery Expense 100 Cash 100 June 6 Payable Dave s Wholesalers 500 Merchandise Inventory 500 June 10 Merchandise Inventory 1,750 Payable Angie s Antique Dealers 1,750 June 11 Payable Dave s Wholesalers 2,000 Merchandise Inventory 40 Cash 1,960 June 12 Receivable Mr. Ireland 600 Sales 600

2 Page 3 June 12 Cost of Goods Sold 400 Merchandise Inventory 400 June 15 Cash ( ) Sales Discounts (750 x 0.03= 22.50) Receivable Mrs. Burns 750 June 16 Payable Angie s Antiques 450 Merchandise Inventory 450 June 18 Sales Returns and Allowances 200 Receivable Mr. Ireland 200 June 22 Cash (400 12) 388 Sales Discounts (400 x 0.03) 12 Receivable Mr. Ireland ( ) 400 June 30 Payable Angie s Antique Dealers 1,300 Cash 1,300 1, = 1,300

3 2. Kira s Flower Shop Income Statement For the year ended December 31 st, 2019 Sales $ 165,245 Less: Sales Discounts $ 2,250 Sales Returns and Allowances 750 3,000 Net Sales $ 162,245 Cost of Goods Sold: Merchandise Inventory, January 1st, 2019 $ 18,550 Purchases $ 45,800 Less: Purchase Discounts $6,800 Purchase Returns and Allowances 1,250 8,050 Net Purchases $ 37,750 Add: Transportation In 3,250 Cost of Goods Purchased 41,000 Goods Available for Sale $ 59,550 Less: Merchandise Inventory, December 31st, ,350 Cost of Goods Sold 40,200 Gross Profit $ 122,045 Operating Expenses: Selling Expenses: Advertising Expense $ 4,500 Depreciation Expense Store Equipment 3,600 Store Rent Expense 24,000 Store Supplies Expense 750 Store Telephone Expense 345 Store Wages Expense 35,000 Total Selling Expenses $ 68,195 General and Administrative Expenses: Depreciation Expense Office Equipment $ 800 Office Rent Expense 9,000 Office Supplies Expense 1,250 Office Telephone Expense 800 Office Salaries Expense 15,100 Total General and Administrative Expenses 26,950 Total Operating Expenses 95,145 Operating Profit $ 26,900 Other Expenses: Interest Expense 900 Profit $ 26,000

4 3. Indicated below is the December 31 st, 2019 inventory of the Goodale Inc. Also, the current replacement costs are given. Items: Units Unit Cost NRV Total Unit Cost Total NRV Cost A Individual Item B Inventory as a whole A 6,000 $10 $12 $60,000 $72,000 $60,000 B 4,000 $8 $6 $32,000 $24,000 $24,000 C 12,000 $6 $4 $72,000 $48,000 $48,000 D 2,000 $4 $2 $8,000 $4,000 $4,000 Total $172,000 $148,000 $136,000 $148,000 Required: Calculate the lower of cost or market. A) For each individual inventory item = $136,000 B) For the inventory as a whole = $148,000 C) Prepare the necessary year ended adjusting entry based on your answer from part A. Page Dec 31 Cost of Goods Sold 36,000 Merchandise Inventory 36, , ,000 = 36, Sales Journal Page 3 Date Account Debited Invoice Number PR Accts Rec Dr Sales COGS Dr Merch Inv Mar 2 L. Hazard ,800 10,400 Mar 3 S. Segura 841 9,200 6,800 Mar 10 M. Cobb 842 4,600 3,200 Date Account Date of Invoice Purchases Journal Page 3 Terms PR Payable Merch Inv Dr Office Supplies Other Mar 3 Able Co Mar 3 n/10 EOM 1,200 1,200 Mar 5 Defoe Ind Mar 3 2/10 n/30 42,600 42,600 Mar 9 Jet Supply Mar 9 n/10 EOM 20,850 20,850 Mar 14 Wells Co Mar 13 2/10,n/30 31,625 31,625 Mar 16 Able Co Mar 16 n/10 EOM 1,670 1,670

5 Date Account Credited Explanation PR Cash Cash Receipts Journal Page 3 Sales Discount Sales Cr Receivable Other COGS Merch. Inv. Mar 6 L-T Note Pay L-T Note Pay 36,000 36, L. Hazard INV , , Sales Cash Sales 134, ,680 95, M. Cobb Inv , ,600 Date Ch. No. Payee Account Debited Cash Disbursements Journal Page 3 PR Cash Merchandise Inventory Payable Other Mar Defoe Ind Defoe Industries 41, ,600 Mar Payroll Sales Salaries Expense 15,900 15,900 Mar Wells Co Welch Company 28, ,200 Mar Payroll Sales Salaries Expense 15,900 15,900 Page Mar 17 Payable Wells Company 2,425 Merchandise Inventory 2,425 Mar 19 Payable Jet Supply 630 Office Equipment A fire destroyed the inventory of Abba Cadabba on April 15. The following data were found to be in the accounting records: January 1 $20,000 Purchases from January to April 15 $38,000 Sales from January 1 to April 15 $80,000 The Company has an estimated gross profit rate of 54%. In the space provided calculate the amount of inventory destroyed in the fire using the Gross Profit Method. Beginning Inventory 20,000 Purchases 38,000 Goods Available For Sale 58,000 Sales 86,000 X (1 0.54) Cost of Goods Sold 39,560 Ending Inventory 18,440

6 6.A) Moving Weighted Average Date Purchases Sales (At Cost) Ending Inventory Aug 1 Beginning 125 x $1.10=$ x $1.10 = $ Aug x $1.25 = $ x $1.25 = + $ x $1.18 = $325 Aug x $1.18 = $ x $1.18 = - $ x $1.18 = $ Aug x $1.35 = $ x $1.35 = + $ x $1.25 = $ Aug x $1.25 = $ x $1.25 = - $ x $1.24 = $ Aug x $1.30 = $ x $1.30 = + $ x $1.26 = $ Total Purchases = $ Cost of Goods Sold = $276 Ending Inventory = $ B) Perpetual FIFO Date Purchases Sales (At Cost) Ending Inventory Aug 1 Beginning 125 x $1.10=$ x $1.10 = $ Aug x $1.25 = $ x $1.10 = $ x $1.25 = $ Aug x $1.10 = $ x $1.10 = $ x $1.25 = $ Aug x $1.35 = $ x $1.10 = $ x $1.25 = $ x $1.35 = $ Aug = 50 x $1.10 = $55.00 = 100 x $1.25 = $ x $1.25 = $ x $1.35 = $ Aug x $1.30 = $ x $1.25 = $ x $1.35 = $ x $1.30 = $97.50 Total Purchases = $ Cost of Goods Sold = $ Ending Inventory = $ Page Oct 1 Petty Cash 400 Cash 400 Oct 31 Office Supplies 45 Postage Expense 35 Merchandise Inventory 80 Other Expenses 25 Cash Short/Over 5 Cash 90 Petty Cash 100

7 8. Smith Company Bank Reconciliation November 30, 2019 Bank Statement Balance $20, Book Balance $14,649 Add: Add: Deposit on November 30 4, Note Receivable $4,300 Total $24, Less: Collection Fee 50 4,250 Less: Total $18,899 Outstanding Cheques: Less: #103 $2, Book Keeping Error 450 #106 1, Interest Expense #107 2, Banking Error Cheque #102 1, , Adjusted Bank Balance $18,419 Adjusted Book Balance $18419 Page Nov 30 Cash 4,250 Collection Fee 50 Note Receivable 4,300 Nov 30 Office Equipment 450 Cash 450 Nov 30 Interest Expense 30 Cash 30