2011 02 05 - 132842 - p5 7a [PDF]

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At the beginning of the current season, the ledger of Village Tennis Shop showed Cash $2,500; Merchandise Inventory $1,700; and Common Stock $4,200. The following transactions were completed during April. Apr. 4 Purchased racquets and balls from Denton Co. $740, terms 3/10, n/30. 6 Paid freight on Denton Co. purchase $60. 8 Sold merchandise to members $900, terms n/30. 10 Received credit of $40 from Denton Co. for a damaged racquet that was returned. 11 Purchased tennis shoes from Newbee Sports for cash $300. 13 Paid Denton Co. in full. 14 Purchased tennis shirts and shorts from Venus’s Sportswear $600, terms 2/10, n/60. 15 Received cash refund of $50 from Newbee Sports for damaged merchandise that was returned. 17 Paid freight on Venus’s Sportswear purchase $30. 18 Sold merchandise to members $1,000, terms n/30. 20 Received $500 in cash from members in settlement of their accounts. 21 Paid Venus’s Sportswear in full. 27 Granted an allowance of $30 to members for tennis clothing that did not fit properly. 30 Received cash payments on account from members $500. 234 Chapter 5 Accounting for Merchandising Operations (c) Total debits $6,160 Determine cost of goods sold and gross profit under periodic approach. (SO 6, 7) Gross profit $310,300 Calculate missing amounts and assess profitability. (SO 6, 7) (a) 2007 $141,600 (c) 2007 Ending accts payable $15,000 Journalize, post, and prepare trial balance and partial income statement using periodic approach. (SO 7, 8) The chart of accounts for the tennis shop includes Cash; Accounts Receivable; Merchandise Inventory; Accounts Payable; Common Stock; Sales; Sales Returns and Allowances; Purchases; Purchase Returns and Allowances; Purchase Discounts; and Freight-in. Instructions (a) Journalize the April transactions using a periodic inventory system.



(b) Using T accounts, enter the beginning balances in the ledger accounts and post the April transactions. (c) Prepare a trial balance on April 30, 2008. (d) Prepare an income statement through gross profit, assuming merchandise inventory on hand at April 30 is $2,296 (a) Date Apr.



4



 6



 8



10



11



13



14



15



General Journal Account Titles and Explanation Purchases................................................................................. Accounts Payable..........................................................



Debit 740



740



Freight-in................................................................................. Cash................................................................................



60



Accounts Receivable............................................................... Sales................................................................................



  900



Accounts Payable.................................................................... Purchase Returns and Allowances..............................



40



Purchases................................................................................. Cash................................................................................



300



Accounts Payable ($740 – $40)............................................... Purchase Discounts ($700 X 3%)................................. Cash................................................................................



  700



Purchases................................................................................. Accounts Payable..........................................................



600



Cash



60



  900



40



300



  21 679



600   50



Purchase Returns and Allowances.............................. 17



18



20



Credit



  50



Freight-in................................................................................. Cash................................................................................



30



Accounts Receivable............................................................... Sales................................................................................



1,000



Cash



  500



30



1,000



Accounts Receivable..................................................... 21 Accounts Payable.................................................................... Purchase Discounts ($600 X 2%)................................. Cash................................................................................ Date Account Titles and Explanation Apr.  27 Sales Returns and Allowances.............................................. Accounts Receivable....................................................  30 Cash



  500 600



Debit 30



12 588 Credit 30



  500 Accounts Receivable....................................................



  500



(b) 4/1 Bal. 4/15 4/20 4/30 4/30 Bal.



Cash 2,500 4/6 50 4/11 500 4/13 500 4/17 4/21 1,893



Accounts Receivable 4/8 900 4/20 4/18 1,000 4/27 4/30 4/30 Bal. 870



60 300 679 30 588



4/10 4/13 4/21



500 30 500



Accounts Payable 40 4/4 700 4/14 600 4/30 Bal.



4,200 4,200



Sales 4/8 4/18



900 1,000



Purchase Discounts 4/13 4/21



Sales Returns and Allowances 4/27 30 4/30 Bal. 30



4/4 4/11 4/14 4/30 Bal.



Purchases 740 300 600 1,640



4/30 Bal.



4/6 4/17 4/30 Bal.



0



Common Stock 4/1 Bal. 4/30 Bal.



4/30 Bal. Merchandise Inventory 4/1 Bal. 1,700 4/30 Bal. 1,700



740 600



Freight-in 60 30 90



1,900



21 12 33



Purchase Returns and Allowances 4/10 4/15 4/30 Bal. (c)



40 50 90 VILLAGE TENNIS SHOP Trial Balance April 30, 2008



Cash.................................................................................................. Accounts Receivable....................................................................... Merchandise Inventory.................................................................. Common Stock................................................................................ Sales.................................................................................................. Sales Returns and Allowances........................................................ Purchases......................................................................................... Purchase Returns and Allowances................................................ Purchase Discounts......................................................................... Freight-in.........................................................................................



Debit $1,893   870  1,700



$4,200 1,900 30 1,640 90 33 90 $6,223



VILLAGE TENNIS SHOP Income Statement (Partial) For the Month Ended April 30, 2008 Sales revenues Sales............................................................... Less: Sales returns and   allowances................................... 30 Net sales ...................................................... Cost of goods sold Inventory, April 1......................................... Purchases ...........................................$1,640 Less:Purchase returns.................................  and allowances........................... Purchase discounts........................ Net purchases...............................................



$1,900



 1,870 $1,700 $90 33



123 1,517



Credit



$6,223



Add: Freight-in............................................ Cost of goods purchased.............................. Cost of goods available for sale ................................................ Inventory, April 30....................................... Cost of goods sold................................ 1,011 Gross profit............................................................ $ 859



90 1,607 3,307 2,296