Chapter 5 Which account does a merchandiser use that a service company does not? use? A. Sales Revenue B. Merchandise Inventory C. Cost of Goods Sold D. All of the above 2. Hajjar jwellers uses a perpetual inventory system and had the following purchase transactions. Journalize all necessary transactions. Explanations are not required. Jun.Jun. 20 Purchased inventory of $ 5 comma 100$5,100 on account from SampsonSampson ?Diamonds, a jewelry importer. Terms were 11?/15, ?n/45, FOB shipping point. 20 Paid freight? charges, $ 600$600. Jul.Jul. 4 Returned $ 700$700 of inventory to SampsonSampson. 14 Paid SampsonSampson ?Diamonds, less return. 16 Purchased inventory of $ 3 comma 900$3,900 on account from SmithSmith ?Diamonds, a jewelry importer. Terms were 33?/10, ?n/EOM, FOB destination. 18 Received a $ 900$900 allowance from SmithSmith for damaged but usable goods. 24 Paid SmithSmith ?Diamonds, less allowance and discount. 3. Journalize the following transactions that occurred in SeptemberSeptember 20152015 for OceanicOceanic assuming the perpetual inventory system is being used. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. 3 Purchased merchandise inventory on account from SharpSharp ?Wholesalers, $ 7 comma 000$7,000. Terms 11?/15, ?n/EOM, FOB shipping point. 4 Paid freight bill of $ 65$65 on SeptemberSeptember 3 purchase. 4 Purchase merchandise inventory for cash of $ 1 comma 600$1,600. 6 Returned $ 800$800 of inventory from SeptemberSeptember 3 purchase. 8 Sold merchandise inventory to HerrickHerrick ?Company, $ 5 comma 800$5,800?, on account. Terms 11?/15, ?n/35. Cost of? goods, $ 2 comma 378$2,378. 9 Purchased merchandise inventory on account from TaylorTaylor ?Wholesalers, $ 6 comma 000$6,000. Terms 11?/10, ?n/30, FOB destination. 10 Made payment to SharpSharp Wholesalers for goods purchased on SeptemberSeptember ?3, less return and discount. 12 Received payment from HerrickHerrick ?Company, less discount. 13 After? negotiations, received a $ 100$100 allowance from TaylorTaylor Wholesalers. 15 Sold merchandise inventory to JexJex ?Company, $ 3 comma 200$3,200?, on account. Terms 33?/10, ?n/EOM. Cost of? goods, $ 1 comma 376$1,376. 22 Made? payment, less? allowance, to TaylorTaylor Wholesalers for goods purchased on SeptemberSeptember 9. 23 JexJex Company returned $ 200$200 of the merchandise sold on SeptemberSeptember 15. Cost of? goods, $ 86$86. 25 Sold merchandise inventory to SundunSundun for $ 1 comma 300$1,300 on account that cost $ 507$507. Terms of 33?/10, ?n/30 were? offered, FOB shipping point. As a courtesy to SundunSundun?, $ 50$50 of freight was added to the invoice for which cash was paid by OceanicOceanic. 26 After? negotiations, granted a $ 400$400 allowance to SundunSundun for merchandise purchased on SeptemberSeptember 25. 29 Received payment from SundunSundun?, less allowance and discount. 30 Received payment from JexJex ?Company, less return. 4. Suppose? Dave's Discount's Merchandise Inventory account showed a balance of? $8,000 before the? year-end adjustments. The physical count of goods on hand totaled? $7,400. Dave uses a perpetual inventory system. To adjust the? accounts, which entry would the company? make? A. Merchandise Inventory 600 Cost of Goods Sold 600 B. Cost of Goods Sold 600 Merchandise Inventory 600 Your answer is correct.C. Merchandise Inventory 600 Accounts Receivable 600 D. Accounts Payable 600 Merchandise Inventory 600 5. The adjusted trial balance of Proud Pappa MusicProud Pappa Music Company at June 30 comma 2015June 30, 2015?, ?follows: Proud Pappa Music Company Adjusted Trial Balance June 30, 2015 Balance Account Title Debit Credit Cash $4,100 Accounts Receivable 38,800 Merchandise Inventory 16,900 Office Supplies 300 Furniture 39,300 Accumulated Depreciation—Furniture $8,200 Accounts Payable 13,400 Salaries Payable 1,100 Unearned Revenue 6,600 Notes Payable, long-term 13,000 Pappa, Capital 38,400 Pappa, Withdrawals 42,000 Sales Revenue 180,000 Sales Returns and Allowances 3,500 Sales Discounts 1,000 Cost of Goods Sold 81,000 Selling Expense 19,200 Administrative Expense 13,000 Interest Expense 1,600 Total $260,700 $260,700 ?Requirements: 1. Prepare Proud Pappa'sProud Pappa's ?multi-step income statement for the year ended June 30 comma 2015June 30, 2015. 2. Journalize Proud Pappa'sProud Pappa's closing entries. 3. Prepare a? post-closing trial balance as of June 30 comma 2015June 30, 2015. 6. 11. Big MusclesBig Muscles ?Motorcycle's selected accounts as of DecemberDecember 3131?, 20152015 ?follow: Selling Expenses $10,400 Interest Revenue 1,200 Sales Returns and Allowances 4,200 Sales Revenue 122,000 Cost of Goods Sold 88,000 Sales Discount 3,500 Administrative Expense 10,000 Determine the gross profit percentage for the year ended DecemberDecember 3131?, 20152015. 7. Upper MM Wholesale Company began the year with merchandise inventory of $ 10 comma 000$10,000. During the? year, Upper MM purchased $ 93 comma 000$93,000 of goods and returned $ 6 comma 200$6,200 due to damage. Upper MM also paid freight charges of $ 1 comma 100$1,100 on inventory purchases. At? year-end, Upper MM?'s ending merchandise inventory balance stood at $ 17 comma 500$17,500. Assume that Upper MM uses the periodic inventory system. Compute Upper MM?'s cost of goods sold for the year. Chapter 6 1. Which principle or concept states that businesses should use the same accounting methods and procedures from period to? period? A. Materiality B. Consistency Your answer is correct.C. Conservatism D. Disclosure 2. Assume FairpriceFairprice.com began OctoberOctober with 88 units of inventory that cost a total of $ 160$160. During OctoberOctober?, FairpriceFairprice purchased and sold goods as follows?: Oct.Oct. 8 Purchase 2424 units? @ $ 21$21 14 Sale 2020 units? @ $ 42$42 22 Purchase 1616 units? @ $ 23$23 27 Sale 2424 units? @ $ 42$42 Under the FIFO inventory costing method and the perpetual inventory? system, how much is FairpriceFairprice?'s cost of goods sold for the sale on OctoberOctober ?14? A. $ 840$840 B. $ 412$412 .C. $ 664$664 D. $ 420$420 3. Fancy IronFancy Iron began AugustAugust with 7070 units of iron inventory that cost $ 25$25 each. During AugustAugust?, the company completed the following inventory? transactions: Units Unit Cost Unit Sale Price Aug. 3 Sale 60 $74 8 Purchase 80 $43 21 Sale 70 79 30 Purchase 20 49 1. Prepare a perpetual inventory record for the merchandise inventory using the FIFO inventory costing method. 2. Prepare a perpetual inventory record for the merchandise inventory using the LIFO inventory costing method. 3. Prepare a perpetual inventory record for the merchandise inventory using the?weighted-average inventory costing method. 4. Determine the? company's cost of goods sold for AugustAugust using? FIFO, LIFO, and? weighted-average inventory costing methods. 5. Compute gross profit for AugustAugust using? FIFO, LIFO, and? weighted-average inventory costing methods. 6. If the business wanted to maximize gross? profit, which method would it?select? 4. Some of Upper H and Upper JH and J ?Electronics' merchandise is gathering dust. It is now DecemberDecember 3131?, 20152015?, and the current replacement cost of the ending merchandise inventory is $ 30 comma 000$30,000 below the? business's cost of the? goods, which was $ 105 comma 000.$105,000. Before any adjustments at the end of the? period, the? company's Cost of Goods Sold account has a balance of $ 410 comma 000.$410,000. Requirements 1. Journalize any required entries. 2. At what amount should the company report merchandise inventory on the balance? sheet? 3. At what amount should the company report cost of goods sold on the income? statement? 4. Which accounting principle or concept is most relevant to this? situation? 5.CaliforniaCalifornia Pool? Supplies' merchandise inventory data for the year ended December 31 comma 2015 commaDecember 31, 2015, ?follow: Sales Revenue $71,000 Cost of Goods Sold: Beginning Merchandise Inventory $3,700 Net Cost of Purchases 37,400 Cost of Goods Available for Sale 41,100 Less: Ending Merchandise Inventory 4,700 Cost of Goods Sold 36,400 Gross Profit $34,600 Requirements 1. Assume that the ending merchandise inventory was accidentally overstated by $ 900$900. What are the correct amounts for cost of goods sold and gross? profit? 2. How would the inventory error affect CaliforniaCalifornia Pool? Supplies' cost of goods sold and gross profit for the year ended December? 31, 20162016?, if the error is not corrected in 20152015?? 6. Next HopeNext Hope reported the following income statement for the year ended DecemberDecember 3131?, 20162016?: Next Hope Income Statement Year Ended December 31, 2016 Sales Revenue $162,000 Cost of Goods Sold: Beginning Merchandise Inventory $9,200 Net Cost of Purchases 76,000 Cost of Goods Available for Sale 85,200 Less: Ending Merchandise Inventory 15,000 Cost of Goods Sold 70,200 Gross Profit 91,800 Operating Expenses 63,400 Net Income $28,400 Requirements 1. Compute Next HopeNext Hope?'s inventory turnover rate for the year. 2. Compute Next HopeNext Hope?'s ?days' sales in inventory for the year. 7. Assume that HeavenlyHeavenly Coffee Shop completed the following periodic inventory transactions for a line of merchandise? inventory: Jun. 1 Beginning merchandise inventory 16 units @ $16 each 12 Purchase 10 units @ $19 each 20 Sale 12 units @ $38 each 24 Purchase 18 units @ $20 each 29 Sale 19 units @ $38 each Requirements 1. Compute ending merchandise? inventory, cost of goods? sold, and gross profit using the FIFO inventory costing method. 2. Compute ending merchandise? inventory, cost of goods? sold, and gross profit using the LIFO inventory costing method. 3. Compute ending merchandise? inventory, cost of goods? sold, and gross profit using the? weighted-average inventory costing method.? (Round weighted average cost per unit to the nearest cent and all other amounts to the nearest? dollar.) 8.Glass Company had the following cost and retail pricing on its merchandise inventory. In? addition, net sales revenue for the time period was $ 99 comma 000$99,000. Cost Retail Beginning Merchandise Inventory $26,000 $48,300 Net Purchases 94,000 190,400 Goods Available for Sale $120,000 $238,700 Compute the estimated cost of ending merchandise inventory by the retail method.?(Round the cost to retail ratio to the nearest?percent.)
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