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Principles of Accounting, Volume 1: Financial Accounting

Problem Set B

Principles of Accounting, Volume 1: Financial AccountingProblem Set B
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PB 1.

LO 6.1Record journal entries for the following transactions of Furniture Warehouse.

  1. July 5: Purchased 30 couches at a cost of $150 each from a manufacturer. Credit terms are 2/15, n/30, invoice date July 5.
  2. July 10: Furniture Warehouse returned 5 couches for a full refund.
  3. July 15: Furniture Warehouse found 6 defective couches, but kept the merchandise for an allowance of $500.
  4. July 20: Furniture Warehouse paid their account in full with cash.
PB 2.

LO 6.1Record journal entries for the following transactions of Mason Suppliers.

  1. Sep. 8: Purchased 50 deluxe hammers at a cost of $95 each from a manufacturer. Credit terms are 5/20, n/60, invoice date September 8.
  2. Sep. 12: Mason Suppliers returned 8 hammers for a full refund.
  3. Sep. 16: Mason Suppliers found 4 defective hammers, but kept the merchandise for an allowance of $250.
  4. Sep. 28: Mason Suppliers paid their account in full with cash.
PB 3.

LO 6.2Costume Warehouse sells costumes and accessories and purchases their merchandise from a manufacturer. Review the following transactions and prepare the journal entry or entries if Costume Warehouse uses

  1. the perpetual inventory system
  2. the periodic inventory system
Jun. 4 Costume Warehouse purchases 88 costumes on credit at a purchase price of $15 per costume. The terms of the purchase are 5/15, n/30, with an invoice date of June 4.
Jun. 12 Costume Warehouse returns 20 costumes to the manufacturer for a full refund.
Jun. 19 Costume Warehouse pays in full for the remaining costumes, less the return.
PB 4.

LO 6.2Pharmaceutical Supplies sells medical supplies and purchases their merchandise from a manufacturer. Review the following transactions and prepare the journal entry or entries if Pharmaceutical Supplies uses

  1. the perpetual inventory system
  2. the periodic inventory system
Apr. 7 Pharmaceutical Supplies purchases 50 medical stands on credit at a purchase price of $15 per stand. The terms of the purchase are 5/10, n/45, with an invoice date of April 7.
Apr. 11 Pharmaceutical Supplies returns 18 stands to the manufacturer for a full refund.
Apr. 17 Pharmaceutical Supplies pays in full for the remaining stands, less the return.
PB 5.

LO 6.3Review the following transactions for April Anglers and record any required journal entries.

Oct. 4 April Anglers purchases 82 fishing poles at $33 each with cash.
Oct. 5 April Anglers purchases 116 fishing poles at $30 each on credit. Terms of the purchase are 3/15, n/30, invoice date October 5.
Oct. 12 April discovers 18 of the fishing poles are damaged from the October 4 purchase and returns them to the supplier for a full refund. April also discovers that 32 of the fishing poles from the October 5 purchase are the wrong length but keeps them since the supplier granted an allowance of $15 per fishing pole.
Oct. 24 April pays their account in full from the October 5 purchase, less any returns, allowances, and/or discounts.
PB 6.

LO 6.3Review the following transactions for Dish Mart and record any required journal entries. Note that all purchase transactions are with the same supplier.

Nov. 5 Dish Mart purchases 45 sets of cutlery for $100 per set with cash.
Nov. 9 Dish Mart purchases 50 sets of cutlery for $120 per set on credit. Terms of the purchase are 5/15, n/60, invoice date November 9.
Nov. 13 Dish Mart discovers 15 of the cutlery sets are damaged from the November 9 purchase and returns them to the supplier for a full refund.
Nov. 14 Dish Mart purchases 30 sets of cutlery for $130 per set on credit. Terms of the purchase are 5/10, n/60, invoice date November 14.
Nov. 15 Dish Mart discovers that 10 of the cutlery sets from the November 14 purchase and 20 of the cutlery sets from the November 5 purchase are missing a few spoons but keeps them since the supplier granted an allowance of $30 per set for the November 14 cutlery sets and $35 per set for the November 5 cutlery sets. Dish Mart and the supplier have agreed to reduce the amount of debt Dish Mart has outstanding instead of sending a separate check for the November 5 allowance in cash.
Nov. 24 Dish Mart pays their account in full for all outstanding purchases, less any returns, allowances, and/or discounts.
PB 7.

LO 6.4Review the following sales transactions for April Anglers and record any required journal entries.

Oct. 4 April Anglers made a cash sale of 40 fishing poles to customer Billie Dyer at a price of $55 per pole. The cost to April is $33 per pole.
Oct. 5 April Anglers sells 24 fishing poles to customer Billie Dyer at a price of $52 per pole on credit. The cost to April is $30 per pole. Terms of the sale are 2/10, n/30, invoice date October 5.
Oct. 12 Billie returns seven of the fishing poles from the October 4 purchase to April Anglers for a full refund. April returns these poles to their inventory at the original cost per pole. Billie also discovers that 6 of the fishing poles from the October 5 purchase are the wrong color but keeps them since April granted an allowance of $18 per fishing pole.
Oct. 24 April pays their account in full from the October 5 purchase, less any returns, allowances, and/or discounts.
PB 8.

LO 6.4Review the following sales transactions for Dish Mart and record any required journal entries. Note that all sales transactions are with the same customer, Bella Davies.

Apr. 5 Dish Mart made a cash sale of 22 sets of cutlery to Bella Davies for $330 per set. The cost per set to Dish Mart is $125 per set.
Apr. 9 Dish Mart sells 14 sets of cutlery to Bella Davies on credit for $345 per set. The cost per set to Dish Mart is $120 per set. Terms of the sale are 2/15, n/60, invoice date April 9.
Apr. 13 Bella returns nine of the cutlery sets from the April 9 sale to Dish Mart for a full refund. Dish Mart restores the cutlery to its inventory at the original cost of $120 per set.
Apr. 14 Bella purchases 18 sets of cutlery for $275 per set on credit, at a cost to Dish Mart of $124 per set. Terms of the sale are 2/10, n/60, invoice date April 14.
Apr. 15 Bella discovers that 5 of the cutlery sets from the April 14 purchase and 10 of the cutlery sets from the April 5 purchase are missing a few spoons but keeps them since Dish Mart granted an allowance of $175 per set for all dish sets. Dish Mart and Bella have agreed to reduce the amount Bella has outstanding instead of sending a separate check for the April 5 allowance in cash.
Apr. 28 Bella Davies pays her account in full for all outstanding purchases, less any returns, allowances, and/or discounts.
PB 9.

LO 6.5Record the following purchase transactions of Custom Kitchens Inc.

Oct. 6 Purchased 230 cabinet doors on credit at a cost of $46 per door. Shipping charges are an extra $2 cash per door and are not subject to discount. Terms of the purchase are 5/15, n/35, FOB Shipping Point, invoice dated October 6.
Oct. 9 Purchased 100 cabinet doors with cash at cost of $40 per door. Shipping charges are an extra $3.25 cash per door and are not subject to discount. Terms of the purchase are FOB Destination.
Oct. 20 Custom Kitchens Inc. pays in full for their purchase from October 6.
PB 10.

LO 6.5Record the following sales transactions of Money Office Supplies.

Apr. 4 Made a cash sale to a customer for 15 chairs at a sales price of $80 per chair. The cost to Money Office Supplies is $55 per chair. Shipping charges are an extra $4 cash per chair and are not subject to discount. Terms of the sale are FOB Shipping Point.
Apr. 9 Sold 20 chairs on credit for $85 per chair to a customer. The cost per chair to Money Office Supplies is $50 per chair. Shipping charges are an extra $4.50 cash per chair and are not subject to discount. Terms of the sale are 3/10, n/30, FOB Destination, invoice dated April 9.
Apr. 19 The customer pays in full for their purchase on April 9.
PB 11.

LO 6.5Record the following sales transactions of Custom Kitchens Inc.

Nov. 12 Made a cash sale to a customer for 34 cabinet doors at a sales price of $72 per door. The cost to Custom Kitchens Inc. is $46 per door. Shipping charges are an extra $3.15 cash per door and are not subject to discount. Terms of the sale are FOB Shipping Point.
Nov. 16 Sold 22 doors on credit for $80 per door to a customer. The cost per door to Custom Kitchens Inc. is $40 per door. Shipping charges are an extra $4.00 cash per door and are not subject to discount. Terms of the sale are 5/15, n/40, FOB Destination, invoice dated November 12.
Nov. 24 The customer pays in full for their purchase on November 16.
PB 12.

LO 6.6The following is the adjusted trial balance data for Elm Connections as of December 31, 2019.

Elm Connections Adjusted Trial Balance for December 31, 2019. Debits or Credits, showing Cash: $596,823 credit; Accounts Receivable: $34,672 debit; Buildings: $350,000 debit; Merchandise Inventory: $263,909 debit; Accounts Payable: $502,690 credit; Common Stock: $432,975 credit; Sales: $603,427 credit; Interest Revenue: $94,568 credit; Rent Revenue: $90,000 credit; Sales Salaries Expense: $25,180 debit; Office Supplies Expense: $5,942 debit; Sales Discounts: $99,651 debit; Interest Expense: $3,566 debit; Sales Returns and Allowances: $110,285 debit; Cost of Goods Sold: $180,630; Rent Expense: $15,485; Depreciation Expense: Office Equipment: $9,000 debit; Insurance Expense: $9,324 debit; and Advertising Expense: $19,193 debit, for a debit total of $1,723,660 and a credit total of $1,723,660.
  1. Use the data provided to compute net sales for 2019.
  2. Compute the gross margin for 2019.
  3. Compute the gross profit margin ratio (rounded to nearest hundredth)
  4. Prepare a simple income statement for the year ended December 31, 2019.
  5. Prepare a multi-step income statement for the year ended December 31, 2019.
PB 13.

LO 6.6Following is the adjusted trial balance data for Garage Parts Unlimited as of December 31, 2019.

Garage Parts Unlimited Adjusted Trial Balance for December 31, 2019. Debits or Credits, showing Cash: $624,500 credit; Accounts Receivable: $100,233 debit; Buildings: $465,099 debit; Merchandise Inventory: $277,340 debit; Accounts Payable: $287,693 credit; Common Stock: $564,500 credit; Sales: $885,244 credit; Interest Revenue: $216,745 credit; Rent Revenue: $101,600 credit; Sales Salaries Expense: $29,878 debit; Office Supplies Expense: $5,942 debit; Sales Discounts: $112,431 debit; Interest Expense: $9,560 debit; Sales Returns and Allowances: $162,312 debit; Cost of Goods Sold: $208,016; Rent Expense: $19,191; Depreciation Expense: Office Equipment: $8,657 debit; Insurance Expense: $10,234 debit; and Advertising Expense: $22,389 debit, for a debit total of $2,055,782 and a credit total of $2,055,782.
  1. Use the data provided to compute net sales for 2019.
  2. Compute the gross margin or 2019.
  3. Compute the gross profit margin ratio (rounded to nearest hundredth)
  4. Prepare a simple income statement for the year ended December 31, 2019.
  5. Prepare a multi-step income statement for the year ended December 31, 2019.
PB 14.

LO 6.7Review the following transactions for April Anglers and record any required journal entries.

Oct. 4 April Anglers purchases 82 fishing poles at $33 each with cash.
Oct. 5 April Anglers purchases 116 fishing poles at $30 each on credit. Terms of the purchase are 3/15, n/30, invoice date October 5.
Oct. 12 April discovers 18 of the fishing poles are damaged from the October 4 purchase and returns them to the supplier for a full refund. April also discovers that 32 of the fishing poles from the October 5 purchase are the wrong length but keeps them since the supplier granted an allowance of $15 per fishing pole.
Oct. 24 April pays their account in full from the October 5 purchase, less any returns, allowances, and/or discounts.
PB 15.

LO 6.7Review the following sales transactions for Dish Mart and record any required journal entries. Note that all sales transactions are with the same customer, Bella Davies.

Apr. 5 Dish Mart made a cash sale of 22 sets of cutlery to Bella Davies for $330 per set. The cost per set to Dish Mart is $125 per set.
Apr. 9 Dish Mart sells 14 sets of cutlery to Bella Davies on credit for $345 per set, with a cost to Dish Mart of $120 per set. Terms of the sale are 2/15, n/60, invoice date April 9.
Apr. 13 Bella discovers 9 of the cutlery sets are damaged from the April 9 sale and returns them to Dish Mart for a full refund.
Apr. 14 Bella purchases 18 sets of cutlery for $275 per set on credit, at a cost to Dish Mart of $124 per set. Terms of the sale are 2/10, n/60, invoice date April 14.
Apr. 15 Bella discovers that 5 of the cutlery sets from the April 14 purchase and 10 of the cutlery sets from the April 5 purchase are missing a few spoons but keeps them since Dish Mart granted an allowance of $175 per set for all dish sets. Dish Mart and Bella have agreed to reduce the amount Bella has outstanding instead of sending a separate check for the April 5 allowance in cash.
Apr. 28 Bella Davies pays her account in full for all outstanding purchases, less any returns, allowances, and/or discounts.
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