Sandy Melon operates a clothing retail operation. She purchases all inventory on credit and uses a periodic inventory system. The Accounts Payable account is used for recording inventory purchases only; all other current liabilities are accrued in separate accounts. You are provided with the following selected information for the fiscal years 2012, 2013, 2014, and 2015.

2012 2013 2014 2015 Inventory (ending) $16,000 $ 11,300 $ 16,400 $ 14,200 Accounts payable (ending) 17,000 Sales revenue 229,700 227,600 220,000 Purchases of inventory on account 146,900 155,700 139,200 Cash payments to suppliers 135,900 159,000 127,000 Instructions

(a) Calculate cost of goods sold for each of the 2013, 2014, and 2015 fiscal years.

(b) Calculate the gross profit for each of the 2013, 2014, and 2015 fiscal years.

(c) Calculate the ending balance of accounts payable for each of the 2013, 2014, and 2015 fiscal years.

(d) The vice presidents of sales, marketing, production, and finance are discussing the company’s results with the CEO. They note that sales declined in fiscal 2015. They wonder whether that means that profitability, as measured by the gross profit rate, necessarily also declined. Explain, calculating the gross profit rate for each fiscal year to help support your answer.

P5-9B At the beginning of the current season on November 1, the ledger of Winona Sports showed Cash $3,300, Inventory $4,700, and Common Stock $8,000. The following transactions occurred during November 2014.

Nov. 5 Purchased hockey sticks and pucks on account from Hi-Stick Co. $1,600, terms 2/10, n/60.

7 Paid freight on Hi-Stick Co. purchases $90.

9 Received credit from Hi-Stick Co. for merchandise returned $350.

10 Sold merchandise on account for $1,000, terms n/30.

12 Purchased gloves, socks, and other accessories on account from Twin City Sportswear $945, terms 1/10, n/30.

14 Paid Hi-Stick Co. in full.

17 Received credit from Twin City Sportswear for merchandise returned $45.

20 Made sales on account for $1,330, terms n/30.

21 Paid Twin City Sportswear in full.

27 Granted credit to customers for clothing that did not fit properly $150.
30 Received payments on account for $1,900.
The chart of accounts for Winona Sports includes Cash, Accounts Receivable, Inventory, Accounts Payable, Common Stock, Sales Revenue, Sales Returns and Allowances, Purchases, Purchase Returns and Allowances, Purchase Discounts, and Freight-In.
Instructions

(a) Journalize the November transactions using a periodic inventory system.

(b) Using T-accounts, enter the beginning balances in the ledger accounts and post the November transactions.

(c) Prepare a trial balance on November 30, 2014.

(d) Prepare an income statement through Gross profit, assuming inventory on hand at November 30 is $5,196.AppendixLO1