Chapter_5_Solutions - Chapter 5 Merchandising Operations...

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Unformatted text preview: Chapter 5 Merchandising Operations √ Quick Check Answers: 1. d 3. a 5. c 7. a 9. d 2. d 4. c 6. b 8. b 10. b Explanations: 4. c. $2,750 = $5,000 × ½ = $2,500 × .98 = $2,450 + $300 freight 5. c. Gross profit ($100,000) = Net sales ($300,000 $40,000 = − $260,000) Cost of goods sold ($160,000) − 10. b Net sales……………………….. $85,000 Cost of goods sold…………… (51,000 ) Gross profit……………………. $34,000 Gross profit percentage = $34,000 = 0.40 = 40% $85,000 Chapter 5 Merchandising Operations 71 √ Short Exercises (10 min.) S 5-1 Journal DATE ACCOUNTS AND EXPLANATIONS POST. REF. DEBIT CREDIT GAP’S ENTRIES a. Inventory 10,000 Accounts Payable 10,000 Purchased inventory on account. b. Accounts Payable 10,000 Inventory ($10,000 × .02) 200 Cash ($10,000 × .98) 9,800 Paid within discount period. (5-10 min.) S 5-2 a. Original purchase amount…………………………... $100,000 Less: Purchase returns…………………………….. (10,000 ) Cost of inventory kept by Toys “ Я ” Us (pay this amount after the discount period)….. $ 90,000 b. Cost of inventory with a purchase discount (pay this amount during the discount period) $90,000 × .97………………………………………... $ 87,300 Accounting 7/e Solutions Manual 72 (10 min.) S 5-3 Journal DATE ACCOUNTS AND EXPLANATIONS POST. REF. DEBIT CREDIT a. May 6 Inventory 100,000 Accounts Payable 100,000 b. 13 Accounts Payable 10,000 Inventory 10,000 c. 15 Accounts Payable ($100,000 $10,000) − 90,000 Inventory ($90,000 × .03) 2,700 Cash ($90,000 × .97) 87,300 d. Two ways to answer: Paid cash of $87,300 Inventory May 6 100,000 May 13 10,000 15 2,700 Bal. 87,300 Chapter 5 Merchandising Operations 73 (5-10 min.) S 5-4 Journal DATE ACCOUNTS AND EXPLANATIONS POST. REF. DEBIT CREDIT TARGET’S ENTRIES a. Inventory 60,000 Accounts Payable 60,000 Purchased inventory on account. b. Accounts Payable 60,000 Cash ($60,000 × .98) 58,800 Inventory ($60,000 × .02) 1,200 Paid within discount period. Target’s cost of the inventory = Amount of the cash payment = $60,000 $1,200 − = $58,800 Accounting 7/e Solutions Manual 74 (10 min.) S 5-5 Journal DATE ACCOUNTS AND EXPLANATIONS POST. REF. DEBIT CREDIT TOMMY’S ENTRIES a. Accounts Receivable 60,000 Sales Revenue 60,000 Sale on account. b. Cost of Goods Sold 32,000 Inventory 32,000 Recorded the cost of goods sold. c. Cash ($60,000 × .98) 58,800 Sales Discounts ($60,000 × .02) 1,200 Accounts Receivable 60,000 Cash collection within the discount period. Chapter 5 Merchandising Operations 75 (10 min.) S 5-6 Journal DATE ACCOUNTS AND EXPLANATIONS POST. REF. DEBIT CREDIT AMAZON.COM’S ENTRIES a. Accounts Receivable (1,000 × $10) 10,000 Sales Revenue 10,000 Sale on account....
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This note was uploaded on 05/05/2010 for the course BUSINESS 71395 taught by Professor Brown during the Spring '09 term at Miss. College.

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Chapter_5_Solutions - Chapter 5 Merchandising Operations...

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