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Chapter 5: Q5-23RQ (page 294)
What does the gross profit percentage measure, and how is it calculated?
The gross profit percentage measures a company鈥檚 ability to generate profits and cover itsoperating expenses.
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Ocean Life Boat Supply uses the periodic inventory method. The adjusted trial balance of Ocean Life Boat Supply at December 31, 2018, follows:
Requirements
1. Journalize the required closing entries at December 31, 2018. Assume ending Merchandise Inventory is $54,300.
2. Set up T-accounts for Income Summary; Retained Earnings; and Dividends. Post the closing entries to the T-accounts, and calculate their ending balances.
3. How much was Ocean Life鈥檚 net income or net loss?
What is inventory shrinkage? Describe the adjusting entry that would be recorded to account for inventory shrinkage.
Journalize the following sales transactions for Straight Shot Archery using the periodic inventory system. Explanations are not required. The company estimates sales returns and allowances at the end of each month.
Aug. 1 Sold \(6,500 of equipment on the account; credit terms are 1/10, n/30.
8 Straight Shot received payment from the customer on the amount due from August 1, less the discount.
15 Sold \)3,100 of equipment on the account; credit terms are n/45, FOB destination.
15 Straight Shot paid \(90 on freight out.
20 Straight Shot negotiated a \)500 allowance on the goods sold on August 15.
24 Received payment from the customer on the amount due from August 15, less the allowance.
Highlight the differences in the closing process when using the periodic inventory system rather than the perpetual inventory system.
Click Computers has the following transactions in July related to the sale of merchandise inventory.
July 12 Sold computers on account for \(8,000 to a customer, terms 3/15, n/30. The cost of the computers is \)4,800. Click uses the gross method for recording sales revenue.
26 Received payment from the customer on balance due.
Journalize the sales transactions for Click Computers assuming the company uses the perpetual inventory system.
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