ACC 110 Lecture Notes - Lecture 4: Gross Margin, The Seller, Current Asset

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12 Apr 2016

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Merchandising businesses are the primary contributor to economic growth, as personal consumption accounts for a significant portion of gdp (gross domestic product). Examples include food and beverage stores, restaurants, and clothing stores. Inventory: the finished goods that merchandisers buy so that they can be resold to customers; current asset because it is owned and has future benefit. Makes the production of financial statements more complex. Inventory is 1) purchased from suppliers on account; 2) cash is paid to the suppliers; 3) inventory is sold to customers on account; and 4) cash is received from the customer. Cost of goods sold: the total value of all inventory sold during a period. It is an expense because it used to generate revenue. Mark-up: the difference between the cost of inventory and the price it is sold at (i. e. a retailer who sells laptops has a mark-up of 15% if the cost is and the price sold at is ).

Related Questions

WHICH I COULDN'T COPY HERE IN EXCEL FORMAT. I WOULD APPRECIATE IFSOMEONE COULD HELP ME WITH THIS.. INSTRUCTIONS ARE AT THE END.THANKYOU SO MUCH!!!

P5-1A Sansomite Co. distributes suitcases to retail stores andextends credit terms of 1/10, n/30
to all of its customers. At the end of June, Sansomite's inventoryconsisted of suitcases costing $1,200
During the month of July the following merchandising transactionsoccurred:

July 1 Purchased suitcases on account for $1,800 from TrunkManufacturers, FOB destination, terms
2/10, n/30. The appropriate party also made a cash payment of $100for freight on this date.
July 3 Sold suitcases on account to Satchel World for $2,000 Thecost of suitcases sold is
$1,200
July 9 Paid Trunk Manufacturers in full.
July 12 Received payment in full from Satchel World.
July 17 Sold suitcases on account to The Going Concern for $1,500The cost of suitcases sold is
$900
July 18 Purchased suitcases on account for $1,700 from KingmanManufacturers, FOB shipping point,
terms 1/10, n/30. The appropriate party also made a cash payment of$100 for freight
on this date.
July 20 Received $300 credit (including freight) for suitcasesreturned to Kingman Manufacturers.
July 21 Received payment in full from The Going Concern.
July 22 Sold suitcases on account to Fly-by-Night for $2,250 Thecost of suitcases sold is
$1,350
July 30 Paid Kingman Manufacturers in full.
July 31 Granted Fly-By-Night $200 credit for suitcases returnedcosting $120

Sansomite's chart of accounts includes the following:
101 Cash 401 Sales
112 Accounts Receivable 412 Sales Returns and Allowances
120 Merchandise Inventory 414 Sales Discounts
201 Accounts Payable 505 Cost of Goods Sold

Instructions:
Journalize the transactions for the month of July for Sansomiteusing a perpetual inventory system.

July 1 Merchandise Inventory Amount
Accounts Payable Amount

July 3 Accounts Receivable Amount
Sales Amount

Cost of Goods Sold Amount
Merchandise Inventory Amount

July 9 Accounts Payable Amount
Merchandise Inventory ($1,800 * 2%) Amount
Cash Amount

July 12 Cash Amount
Sales Discount Amount
Accounts Receivable Amount

July 17 Accounts Receivable Amount
Sales Amount

Cost of Goods Sold Amount
Merchandise Inventory Amount

July 18 Merchandise Inventory Amount
Accounts Payable Amount

Merchandise Inventory Amount
Cash Amount

July 20 Accounts Payable Amount
Merchandise Inventory Amount

July 21 Cash Amount
Sales Discount Amount
Accounts Receivable Amount

July 22 Accounts Receivable Amount
Sales Amount

Cost of Goods Sold Amount
Merchandise Inventory Amount

July 30 Account Payable Amount
Cash Amount

July 31 Sales Returns and Allowances Amount
Accounts Receivable Amount

Merchandise Inventory Amount
Cost of Goods Sold Amount

azurelocust383

O'Quinn Co. distributes suitcases to retail stores and extendscredit terms of 1/10, n/30 to all of its customers. At the end ofJune, O'Quinn's inventory consisted of suitcases costing $2,082.During the month of July the following merchandising transactionsoccurred.
July 1 Purchased suitcases on account for $3,514 from EmersonManufacturers, FOB destination, terms 2/10, n/30. The appropriateparty also made a cash payment of $122 for freight on thisdate.
3 Sold suitcases on account to Straume Satchels for $2,801. Thecost of suitcases sold is $1,681.
9 Paid Emerson Manufacturers in full.
12 Received payment in full from Straume Satchels.
17 Sold suitcases on account to The Going Concern for $2,730. Thecost of the suitcases sold was $1,638.
18 Purchased suitcases on account for $1,734 from HumeManufacturers, FOB shipping point, terms 1/10, n/30. Theappropriate party also made a cash payment of $121 for freight onthis date.
20 Received $343 credit (including freight) for suitcases returnedto Hume Manufacturers.
21 Received payment in full from The Going Concern.
22 Sold suitcases on account to Desmond's for $3,006. The cost ofsuitcases sold was $1,804.
30 Paid Hume Manufacturers in full.
31 Granted Desmond's $241 credit for suitcases returned costing$145.

O'Quinn's chart of accounts includes the following: No. 101 Cash,No. 112 Accounts Receivable, No. 120 Merchandise Inventory, No. 201Accounts Payable, No. 401 Sales, No. 412 Sales Returns andAllowances, No. 414 Sales Discounts, No. 505 Cost of GoodsSold.

Instructions

Journalize the transactions for the month of July for O'Quinn usinga perpetual inventory system. (For multiple debit/credit entries,list amounts from largest to smallest e.g. 10, 5, 3, 2. Roundanswers to 0 decimal places, e.g. 125.)

Date Description/Account Debit Credit
July 1

July 3

(To record credit sale to Straume Satchels.)

(To record cost of merchandise sold.)
July 9

July 12

July 17

(To record credit sale to The Going Concern.)

(To record cost of merchandise sold.)
July 18

(To record goods purchased.)

(To record freight on goods purchased.)
July 20

July 21

July 22

(To record credit sale to Desmond's.)

(To record cost of merchandise sold.)
July 30

July 31

(To record credit to Desmond's for returned goods.)

(To record cost of goods returned.)

apricotmouse608

17 accounting 1 questions! HELP

9. The following amounts and costs of platters were availablefor sale by Corpus Christy Ceramics during 2016:

Beginning inventory	10 units at $41
First purchase	15 units at $55
Second purchase	30 units at $70
Third purchase	25 units at $65

Corpus Christy Ceramics has 35 platters on hand at the end ofthe year.

What is the dollar amount of inventory at the end of the yearaccording to the weighted-average cost method?

Select one:

A. $4,340

B. $9,920

C. $3,465

D. $6,200

32. Santa Fe Corporation uses the perpetual inventory method. OnMarch 1, it purchased $60,000 of merchandise inventory, terms 2/10,n/30. On March 3, Santa Fe returned goods (not damaged) that cost$6,000. On March 9, Santa Fe paid the supplier.

On March 9, Santa Fe should credit:

Select one:

A. Purchase discounts for $1,200

B. Purchase discounts for $1,080

C. Inventory for $1,080

D. Inventory for $1,200

33. Rocky Company has beginning equity of $600,000, net incomeof $100,000, dividends of $60,000 and investments by owners inexchange for stock of $20,000. Its ending equity is:

Select one:

A. $660,000

B. $480,000

C. $536,000

D. $446,000

35. On September 1, 2016, Chopper, Inc. reported RetainedEarnings of $272,000. During the month of September, Choppergenerated revenues of $40,000, incurred expenses of $24,000,purchased equipment for $10,000 and paid dividends of $12,000.

What is the balance in Retained Earnings on September 30,2016?

Select one:

A. $272,000 debit

B. $276,000 credit

C. $ 16,000 credit

D. $274,000 credit

36. Savannah Company purchases $120,000 of inventory during theperiod and sells $36,000 of it for $60,000. Beginning of the periodinventory was $6,000.

What is the companyâs inventory balance to be reported on itsbalance sheet at year end?

Select one:

A. $36,000

B. $90,000

C. $ 4,000

D. $ 6,000

37. Assuming rising prices, which method will give the highestdollar value for cost of goods sold on the income statement?

Select one:

A. FIFO

B. Average Cost

C. LIFO

D. All of these give equal values for cost of goods sold

38. Kali Company began the period with $20,000 in inventory. Thecompany also purchased an additional $20,000 of inventory andreturned $2,000 for a full credit. A physical count of theinventory at yearâend revealed an inventory on hand of $16,000.What was Kaliâs cost of goods sold for the period?

Select one:

a. $50,000

b. $22,000

c. $48,000

d. $16,000

39. The periodic inventory system differs from the perpetualinventory system:

Select one:

because the periodic system is not compatible with moderntechnology.

because the periodic system continually updates inventory, whilethe perpetual inventory system only updates inventory at the end ofthe period.

because the perpetual system continually updates inventory,while the periodic inventory system only updates inventory at theend of the period.

because the periodic system is more complex and costly.

40. Which one of the following is included in currentassets?

Select one:

A. Common stock

B. Accounts receivable

C. Taxes payable

D. Automobiles

41. For the balance sheet to be in balance, the following mustexist:

Select one:

Total assets must be less than total liabilities

Total assets must be greater than total liabilities

Total assets must equal total liabilities plus stockholders'equity

Total liabilities must equal total stockholders' equity

43. Using a perpetual inventory system, the buyerâs journalentry to record the freight costs includes a:

Select one:

A. Debit to Purchases

B. Debit to Inventory

C. Debit to Freight In

D. Debit to Cost of Goods Sold

44. Joshua records purchases at invoice price and uses theperpetual inventory system. On July 5, Joshua returned $6,000 ofgoods purchased on account to the seller.

How would Joshua record this transaction?

Select one:

Accounts Payable		6,000
	Purchases		6,000

Accounts Receivable		6,000
	Inventory		6,000

Accounts Payable		6,000
	Inventory		6,000

Cash		6,000
	Purchases		6,000

45. Smith & Sons purchased $5,000 of merchandise from theClaremont Company with terms of 3/10, n/30. How much discount isSmith & Sons entitled to take if it pays within the alloweddiscount period of 10 days?

Select one:

$100

$50

$300

$150

46. The accounting record for Max III Company reported thefollowing selected information:

Operating Expenses	$180,000
Sales Returns and Allowances	52,000
Sales Discounts	24,000
Sales Revenue	700,000
Cost of Goods Sold	268,000

Determine Max III Company's gross profit.

Select one:

A. $332,000

B. $280,000

C. $308,000

D. $356,000

48. Using a a perpetual inventory system, the sellerâs journalentry to record the payment for merchandise, received from thebuyer, within the discount period includes a:

Select one:

A. Debit to Accounts Receivable

B. Debit to Cost of Goods Sold

C. Credit to Sales Discounts

D. Debit to Sales Discounts

49.Geraldoâs Groceries purchased milk cartons at an invoiceprice of $6,000 and terms of 2/10, n/30. On arrival of the goods,Geraldoâs realized that half of the milk was past the expirationdate, and returned them immediately to the supplier.

If Geraldoâs pays the remaining amount of the invoice within thediscount period, the amount paid should be:

Select one:

A. $2,880

B. $5,880

C. $2,940

D. $6,000

50. Which one of the following is not a current liability?

Select one:

A. Wages payable

B. Accounts payable

C. Wage expense

D. Taxes payable

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ACC 110 Lecture Notes - Lecture 4: Gross Margin, The Seller, Current Asset

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