CHAPTER 5 - CHAPTER5 StudyObjectives 1 priseandamerchand...

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CHAPTER 5 Merchandising Operations and the Multiple-Step Income Statement ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Exercises A Problems B Problems 1. Identify the differences between a service enter- prise and a merchand- ising company. 1, 2, 3, 4, 11 1 2. Explain the recording of purchases under a per- petual inventory system. 8, 12, 13 2, 4 2, 3, 4 1A, 2A, 3A 1B, 2B, 3B 3. Explain the recording of sales revenues under a perpetual inventory system. 5, 6, 7 2, 3 1, 2 1A, 2A, 3A 1B, 2B, 3B 4. Distinguish between a single-step and a multiple- step income statement. 9, 10 1, 5, 6 5, 6, 7, 8, 9 1A, 3A, 4A, 5A, 6A, 7A, 8A 1B, 3B, 4B, 5B, 6B, 7B, 8B 5. Determine cost of goods sold under a periodic sys- tem. 14, 15 7, 8 10, 11 7A, 8A, *9A 7B, 8B, *9B 6. Explain the factors affect- ing profitability. 16, 17 9, 10 6, 7, 8, 9 1A, 4A, 8A 1B, 4B, 8B *7. Explain the recording of purchases and sales of in- ventory under a periodic inventory system. *18 *11 *12 *9A *9B 5-1
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ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Journalize, post, prepare partial income statement, and calculate ratios. Simple 30-40 2A Journalize purchase and sale transactions under a per- petual inventory system. Moderate 20-30 3A Journalize, post, and prepare trial balance and partial in- come statement. Simple 30-40 4A Prepare financial statements and calculate profitability ratios. Moderate 40-50 5A Prepare a correct multiple-step income statement. Complex 20-30 6A Journalize, post, and prepare adjusted trial balance and financial statements. Moderate 40-50 7A Determine cost of goods sold and gross profit under peri- odic approach. Moderate 40-50 8A Calculate missing amounts and assess profitability. Moderate 20-30 *9A Journalize, post, and prepare trial balance and partial income statement using periodic approach. Simple 30-40 1B Journalize, post, prepare partial income statement, and calculate ratios. Simple 30-40 2B Journalize purchase and sale transactions under a per- petual inventory system. Moderate 20-30 3B Journalize, post, and prepare trial balance and partial in- come statement. Simple 30-40 4B Prepare financial statements and calculate profitability ratios. Moderate 40-50 5B Prepare a correct multiple-step income statement. Complex 20-30 6B Journalize, post, and prepare adjusted trial balance and financial statements. Moderate 40-50 7B Determine cost of goods sold and gross profit under peri- odic approach. Moderate 40-50 8B Calculate missing amounts and assess profitability Moderate 20-30 *9B Journalize, post, and prepare trial balance and partial in- come statement using periodic approach. Simple 30-40 5-2
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ANSWERS TO QUESTIONS 1. (a) Disagree. The steps in the accounting cycle are the same for both a merchandising com- pany and a service enterprise. (b) The measurement of income is conceptually the same. In both types of companies, net in- come (or loss) results from the matching of expenses with revenues.
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