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Chapter 5: Q31RQ (page 295)
Describe the calculation of cost of goods sold when using the periodic inventory system.
Answer
The cost of goods sold is computed by considering theopening inventory, net purchases, and closing inventory.
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When a company has a contract involving multiple performance obligations, how must the company recognize revenue?
Journalize the following transactions that occurred in September 2018 for Cardinal. Assume Cardinal uses the gross method to record sales revenue. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.
Sep. 3 Purchased merchandise inventory on account from Sherry Wholesalers, \(4,000. Terms 1/15, n/EOM, FOB shipping point.
4 Paid freight bill of \)75 on September 3 purchase.
4 Purchased merchandise inventory for cash of \(1,900.
6 Returned \)1,100 of inventory from September 3 purchase.
8 Sold merchandise inventory to Houston Company, \(5,500, on account. Terms 3/15, n/35. Cost of goods, \)2,365.
9 Purchased merchandise inventory on account from Tarin Wholesalers, \(12,000. Terms 3/10, n/30, FOB destination.
10 Made payment to Sherry Wholesalers for goods purchased on September 3, less return and discount.
13 After negotiations, received a \)200 allowance from Tarin Wholesalers.
15 Sold merchandise inventory to Java Company, \(3,300, on account. Terms 2/10, n/EOM. Cost of goods, \)1,320.
22 Made payment, less allowance, to Tarin Wholesalers for goods purchased on September 9.
25 Sold merchandise inventory to Smecker for \(1,900 on account that cost \)722. Terms of 1/10, n/30 were offered, FOB shipping point. As a courtesy to Smecker, $85 of freight was added to the invoice for which cash was paid by Cardinal.
28 Received payment from Houston Company.
29 Received payment from Smecker, less discount.
30 Received payment from Java Company.
Journalize the following transactions that occurred in March 2018 for Faucet. Assume Faucet uses the gross method to record sales revenue. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.
Mar. 3 Purchased merchandise inventory on account from Sidecki Wholesalers, \(3,500. Terms 2/15, n/EOM, FOB shipping point.
4 Paid freight bill of \)75 on March 3 purchase.
4 Purchased merchandise inventory for cash of \(2,200.
6 Returned \)800 of inventory from March 3 purchase.
8 Sold merchandise inventory to Harvey Company, \(5,700, on account. Terms 2/15, n/35. Cost of goods, \)2,508.
9 Purchased merchandise inventory on account from Teaton Wholesalers, \(6,000. Terms 2/10, n/30, FOB destination.
10 Made payment to Sidecki Wholesalers for goods purchased on March 3, less return and discount.
13 After negotiations, received a \)100 allowance from Teaton Wholesalers.
15 Sold merchandise inventory to Jackson Company, \(2,900, on account. Terms n/EOM. Cost of goods, \)1,276.
22 Made payment, less allowance, to Teaton Wholesalers for goods purchased on March 9.
25 Sold merchandise inventory to Secker for \(2,000 on account that cost \)880. Terms of 2/10, n/30 were offered, FOB shipping point. As a courtesy to Secker, $85 of freight was added to the invoice for which cash was paid by Faucet.
28 Received payment from Harvey Company.
29 Received payment from Secker, less discount.
30 Received payment from Jackson Company.
The records of Grade A Beef Company list the following selected accounts for the quarter ended September 30, 2018:
Interest Revenue \( 900 Accounts Payable \) 17,000
Merchandise Inventory 46,300 Accounts Receivable 33,500
Notes Payable, long-term 47,000 Accumulated Depreciation鈥� Equipment 36,500
Salaries Payable 2,600 Common Stock 38,000
Net Sales Revenue 294,000 Retained Earnings 3,610
Rent Expense (Selling) 16,700 Dividends 15,000
Salaries Expense (Administrative) 2,500 Cash 7,300
Office Supplies 5,800 Cost of Goods Sold 161,700
Unearned Revenue 13,800 Equipment 131,000
Interest Expense 2,300 Interest Payable 900
Depreciation Expense鈥擡quipment (Administrative) 1,310
Rent Expense (Administrative) 7,400
Utilities Expense (Administrative) 4,500 Salaries Expense (Selling) 5,000
Delivery Expense (Selling) 3,100 Utilities Expense (Selling) 10,900
Requirements
1. Prepare a single-step income statement.
2. Prepare a multi-step income statement.
3. J. Douglas, manager of the company, strives to earn a gross profit percentage of at least 50%. Did Grade A Beef achieve this goal? Show your calculations
Journalize the following transactions that occurred in February 2018 for Oceanic. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Oceanic estimates sales returns at the end of each month.
Feb. 3 Purchased merchandise inventory on account from Silton Wholesalers, \(5,200. Terms 2/15, n/EOM, FOB shipping point.
4 Paid freight bill of \)70 on February 3 purchase.
4 Purchased merchandise inventory for cash of \(1,500.
6 Returned \)900 of inventory from February 3 purchase.
8 Sold merchandise inventory to Herenda Company, \(5,600, on account. Terms 3/15, n/35. Cost of goods, \)2,352.
9 Purchased merchandise inventory on account from Teddy Wholesalers, \(7,000. Terms 1/10, n/30, FOB destination.
10 Made payment to Silton Wholesalers for goods purchased on February 3, less return and discount.
12 Received payment from Herenda Company, less discount.
13 After negotiations, received a \)500 allowance from Teddy Wholesalers.
15 Sold merchandise inventory to Jordon Company, \(3,400, on account. Terms n/EOM. Cost of goods, \)1,496.
22 Made payment, less allowance, to Teddy Wholesalers for goods purchased on February 9.
23 Jordon Company returned \(1,000 of the merchandise sold on February 15. Cost of goods, \)440.
25 Sold merchandise inventory to Smith for \(1,700 on account that cost \)663. Terms of 2/10, n/30 were offered, FOB shipping point. As a courtesy to Smith, $70 of freight was added to the invoice for which cash was paid by Oceanic.
27 Received payment from Smith, less discount.
28 Received payment from Jordon Company, less return.
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