MGAB01H3 Chapter 5.5: Chapter 5.5

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ochretortoise616

1 Nov 2010

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MGAB01H3 Full Course Notes

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One key difference in the two systems is when the cost of goods sold. In periodic, revenues from the sale of merchandise are recorded when sales are made, in the same way as perpetual. However, on the sale date, perpetual also allocates the cost of goods sold and the merchandise. Under a periodic system, purchases of merchandise are made in an expense account purchases rather than merchandise. Freight costs, purchases returns and allowance, and purchase discounts are all separate accounts. Purchasing dr purchases, cr cash or a/p. Freight costs dr freight in, cr cash. Purchases returns and allowances dr a/p, cr purchase returns and allowance. Purchase discounts dr a/p, cr cash, purchase discounts. Sale dr sales, cr cash or a/r. Freight costs dr freight out, cr cash. Sales returns and allowance dr sales returns and allowance, cr a/r. Sales discounts dr cash, sales discount, cr a/r.

Related Questions

The following data were extracted from the accounting records ofHarkins company for the year ended April 30,2014:

merchandise inventory, may 1,2013 380,000

merchandise incentory, april 30,2014 415,000

purchases 3,800,000

purchases returns and allowances 150,000

purchases discounts 80,000

sales 5,850,000

freight in 16,600

a) prepare the cost of merchandise sold section of the yearended April 30,2014, using the periodic inventory system.

b) determine the gross profit to be reported on the incomestatement for the year ended April 30,2014.

c) would gross profit be different if the perpetual inventorysystem was used instead of the periodic inventory system?

beigetortoise309

The worksheet of Bridget's Office Supplies contains thefollowing revenue, cost, and expense accounts. The merchandiseinventory amounted to $58,675 on January 1, 2016, and $51,625 onDecember 31, 2016. The expense accounts numbered 611 through 617represent selling expenses, and those numbered 631 through 646represent general and administrative expenses.

Accounts
401	Sales	$	245,400	Cr.
451	Sales Returnsand Allowances		4,240	Dr.
491	MiscellaneousIncome		290	Cr.
501	Purchases		102,500	Dr.
502	Freight In		1,865	Dr.
503	PurchasesReturns and Allowances		3,490	Cr.
504	PurchasesDiscounts		1,690	Cr.
611	SalariesExpenseâSales		44,200	Dr.
614	Store SuppliesExpense		2,200	Dr.
617	DepreciationExpenseâStore Equipment		1,400	Dr.
631	RentExpense		12,400	Dr.
634	UtilitiesExpense		2,890	Dr.
637	SalariesExpenseâOffice		20,000	Dr.
640	Payroll TaxesExpense		4,900	Dr.
643	DepreciationExpenseâOffice Equipment		460	Dr.
646	UncollectibleAccounts Expense		610	Dr.
691	InterestExpense		520	Dr.

The worksheet of Bridget's Office Supplies contains thefollowing ownerâs equity accounts.

Accounts
301	Bridget Swanson, Capital	$	62,660	Cr.
302	Bridget Swanson, Drawing		40,750	Dr.

Net income for the year $45,635.

The worksheet of Bridget's Office Supplies contains thefollowing asset and liability accounts. The balance of theNotes Payable account consists of notesthat are due within a year.

Accounts
101	Cash	$	9,205	Dr.
107	Change Fund		390	Dr.
111	AccountsReceivable		5,030	Dr.
112	Allowance forDoubtful Accounts		750	Cr.
121	MerchandiseInventory		51,625	Dr.
131	StoreSupplies		990	Dr.
133	PrepaidInterest		75	Dr.
141	StoreEquipment		10,100	Dr.
142	Accum.DepreciationâStore Equipment		1,070	Cr.
151	OfficeEquipment		3,180	Dr.
152	Accum.DepreciationâOffice Equipment		390	Cr.
201	NotesPayable		5,390	Cr.
203	AccountsPayable		3,615	Cr.
216	InterestPayable		55	Cr.
231	Sales TaxPayable		1,780	Cr.