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Warren SM_Ch.06_final - CHAPTER 6 115 EXERCISES Ex 61 a...

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CHAPTER 6 115 115
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EXERCISES Ex. 6–1 a. $318,000 ($795,000 – $477,000) b. 40% ($318,000 ÷ $795,000) c. No. If operating expenses are less than gross profit, there will be a net in- come. On the other hand, if operating expenses exceed gross profit, there will be a net loss. Ex. 6–4 a. Cost of merchandise sold: Merchandise inventory, December 1, 2009 $ 210,000 Purchases $1,400,000 Less: Purchases returns and allowances $20,000 Purchases dis- counts 18,500 38,500 Net purchases $1,361,500 Add freight in 14,100 Cost of merchandise pur- chased 1,375,600 Merchandise available for sale $1,585,600 Less merchandise inventory, Novem- ber 30, 2010 185,000 Cost of merchandise sold $1,400,600 b. $849,400 ($2,250,000 – $1,400,600) 116 116
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Ex. 6–7 a. Selling expense, (1), (2), (7), (8) b. Administrative expense, (3), (5), (6) c. Other expense, (4) 117 117
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Ex. 6–10 a. $15,000 ($250,000 – $10,000 – $225,000) b. $135,000 ($225,000 – $90,000) c. $552,000 ($600,000 – $30,000 – $18,000) d. $222,000 ($552,000 – $330,000) e. $50,000 ($1,000,000 – $40,000 – $910,000) f. $623,500 ($910,000 – $286,500) g. $539,000 ($520,000 + $11,500 + $7,500) h. $520,000 ($400,000 + $120,000) Ex. 6–17 a. $12,500 b. $12,900 c. $125 ($12,500 × 1%) d. $12,775 ($12,900 – $125) Ex. 6–24 a. At the time of sale b. $13,750 c. $14,850 [$13,750 + ($13,750 × 8%)] d. Sales Tax Payable 118 118
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PROBLEMS Prob. 6–1A 1. CASE-IT CO. Income Statement For the Year Ended November 30, 2010 Revenue from sales: Sales $2,703,600 Less: Sales returns and allow- ances $ 37,800 Sales discounts 19,800 57,600 Net sales $2,646,000 Cost of merchandise sold 1,926,000 Gross profit $ 720,000 Expenses: Selling expenses: Sales salaries expense $378,000 Advertising expense 50,900 Depreciation expense—store equipment 8,300 Miscellaneous selling expense 2,000 Total selling expenses $ 439,200 Administrative expenses: Office salaries expense $ 73,800 Rent expense 39,900 Insurance expense 22,950 Depreciation expense—office equipment 16,200 Office supplies expense 1,650 Miscellaneous administrative expense 1,900 119 119
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Total admin- istrative expenses 156,400 Total ex- penses 595,600 Income from operations $ 124,400 Other expense: Interest expense 4,400 Net income $ 120,000 120 120
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Prob. 6–1A Continued 2.
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