Question
1. For a recent year, Target Corporation (TGT) reported revenue of $72,618 million. Itsgross profitwas $21,340 million. What was the amount of Target's cost of
1. For a recent year,Target Corporation (TGT)reported revenue of $72,618 million. Itsgross profitwas $21,340 million. What was the amount of Target's cost of goods sold? $____million
2. For a recent year,Target Corporation (TGT)reported revenue of $39,999 million. Itsgross profitwas $9,200 million.
What was the amount of Target's cost of goods sold? $ ___million
3. Intrax Inc.'s perpetual inventory records indicate that $815,400 of merchandise should be on hand on December 31, 20Y4. The physical inventory indicates that $798,300 of merchandise is actually on hand. Illustrate the effects on the accounts and financial statements of the inventory shrinkage for Intrax Inc. for the year ended December 31, 20Y4.
If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. When entering the income statement effects, enter amounts that decrease net income as negative values.
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4. The following expenses were incurred by a retail business during the year. In which expense section of the income statement should each be reported: (a) selling, (b) administrative, or (c) other?
1. Advertising expense | Choose One: Selling expense Administrative expense Other expense |
2. Depreciation expense on store equipment | Selling expense Administrative expense Other expense |
3. Insurance expense on office equipment | Selling expense Administrative expense Other expense |
4. Interest expense on notes payable | Selling expense Administrative expense Other expense |
5. Rent expense on office building | Selling expense Administrative expense Other expense |
6. Salaries of office personnel | Selling expense Administrative expense Other expense |
7. Salary ofsalesmanager | Selling expense Administrative expense Other expense |
8. Sales supplies used | Selling expense Administrative expense Other expense |
5. On March 31, 20Y5, the balances of the accounts appearing in the ledger of Lange Daughters Inc. are as follows:
| Administrative Expenses | $ 950,000 | Inventory | $ 800,000 | ||||
| Accumulated Dep. - Building | 4,000,000 | Notes Payable | 900,000 | ||||
| Building | 19,000,000 | Office Supplies | 50,000 | ||||
| Common Stock | 1,000,000 | Retained Earnings | 12,365,000 | ||||
| Cash | 2,970,000 | Sales | 17,850,000 | ||||
| Cost of Goods Sold | 10,350,000 | Selling Expenses | 1,650,000 | ||||
| Dividends | 200,000 | Store Supplies | 150,000 | ||||
| Interest Expense | 45,000 |
a. Prepare multiple-step income statement for the year ended March 31, 20Y5.
| Choose One: Gross profit Operating income Sales Sales discounts Sales returns and allowances | =? | ||
| Cost of goods sold Gross profit Interest expense Operating income Sales discounts | =? | ||
| Administrative expenses Cost of goods sold Gross profit Interest expense Operating income | =? | ||
| Operating expenses: | |||
| Net sales Sales Sales discounts Sales returns and allowances Selling expenses | =? | ||
| Administrative expenses Cost of goods sold Gross profit Interest expense Operating income | =? | ||
| Total operating expenses | =? | ||
| Administrative expenses Cost of goods sold Gross profit Interest expense Operating income | =? | ||
| Other expense: | |||
| Administrative expenses Cost of goods sold Gross profit Interest expense Operating income | =? | ||
| Net loss Net income Total expenses Total revenues Sales | =? |
b. Disadvantages of a single-step form of income statement includes all of the following except:
Gross profit is not reported.
Income from operations is not reported.
Total revenues and total expenses are not indicated.
All of the above are disadvantages of a single-step income statement.
6. On March 31, 20Y5, the balances of the accounts appearing in the ledger of Lange Daughters Inc. are as follows:
| Administrative Expenses | $ 187,200 | Inventory | $ 194,900 | ||||
| Accumulated Dep. - Building | 153,720 | Notes Payable | 44,100 | ||||
| Building | 768,600 | Office Supplies | 15,800 | ||||
| Common Stock | 150,000 | Retained Earnings | 703,200 | ||||
| Cash | 72,900 | Sales | 1,908,900 | ||||
| Cost of Goods Sold | 1,049,900 | Selling Expenses | 307,400 | ||||
| Dividends | 37,400 | Store Supplies | 11,700 | ||||
| Interest Expense | 11,300 |
a. Prepare multiple-step income statement for the year ended March 31, 20Y5.
| Interest expenseNet salesSales discountsSales | =? | ||
| Choose One: Cost of goods sold Delivery expense Gross profit Interest expense | =? | ||
| Gross profit Operating income Selling expenses Total expenses | =? | ||
| Operating Expenses: | |||
| Cost of goods sold Gross profit Sales discounts Selling expenses | =? | ||
| Administrative expenses Cost of goods sold Net sales Sales discounts | =? | ||
| Total operating expenses | =? | ||
| Loss from operations Operating income Net income Net loss | =? | ||
| Other expense: | |||
| Administrative expenses Cost of goods sold Interest expense Sales | =? | ||
| Net loss Net income Total expenses Total revenues Sales | =? |
b. Disadvantages of a single-step form of income statement includes all of the following except:
Gross profit is not reported.
Income from operations is not reported.
Total revenues and total expenses are not indicated.
All of the above are disadvantages of a single-step income statement.
7. The following selected transactions were completed by Epic Co. during August of the current year:
Illustrate the effects of each of the transactions on the accounts and financial statements of Epic Co. Identify each transaction by date.
If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases, cash outflows, and the income statement effects that reduce net income as negative amounts.
Aug. 3. Purchased merchandise on account for $33,400, terms FOB destination, 2/10, n/30.
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Aug. 9. Issued debit memorandum for $2,500 ($2,450 net of 2% discount) for merchandise from the August 3 purchase that was damaged in shipment.
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Aug. 10. Purchased merchandise on account, $25,000, terms FOB shipping point, n/eom. Paid $600 cash to the freight company for delivery of the merchandise.
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Aug. 13. Paid for invoice of August 3, less debit memorandum of August 9.
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Aug 31. Paid for invoice of August 10.
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8. The selected transactions below were completed by Affordable Supplies Co., which sells supplies primarily to wholesalers and occasionally to retail customers.
Instructions:
Illustrate the effects on the accounts and financial statements of recording the following transactions of Affordable Supplies Co.
If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases, cash outflows, and the income statement effects that reduce net income as negative amounts.
Jan. 6. Sold merchandise on account, $14,000, terms FOB shipping point, n/eom. The cost of merchandise sold was $8,400.
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Jan. 8. Sold merchandise on account, $20,000, terms FOB destination, 1/10, n/30. The cost of merchandise sold was $14,000.
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Jan. 16. Sold merchandise on account, $19,500, terms FOB shipping point, n/30. The cost of merchandise sold was $11,700.
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Jan. 18. Received check for amount due for sale on January 8.
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Jan. 19. Issued credit memorandum for $4,500 for merchandise returned from sale on January 16. The cost of the merchandise returned was $2,700.
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Jan. 26. Received check for amount due for sale on January 16 less credit memorandum of January 19.
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Jan. 31. Paid Cashell Delivery Service $3,000 for merchandise delivered during January to customers under shipping terms of FOB destination.
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Jan. 31. Received check for amount due for sale of January 6.
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9. The following selected accounts and their current balances appear in the ledger of Prescott Inc. for the fiscal year ended September 30, 20Y8:
| Cash | $ 167,000 | Retained Earnings | $ 507,600 | ||||
| Accounts Receivable | 300,000 | Dividends | 250,000 | ||||
| Inventory | 735,000 | Sales | 7,134,000 | ||||
| Estimated Returns Inventory | 25,000 | Cost of Goods Sold | 4,350,000 | ||||
| Office Supplies | 30,000 | Sales Salaries Expense | 777,600 | ||||
| Prepaid Insurance | 24,000 | Advertising Expense | 91,800 | ||||
| Office Equipment | 230,400 | Depreciation Expense Store Equipment | 16,600 | ||||
| Accumulated Depreciation Office Equipment | 99,000 | Miscellaneous Selling Expense | 4,000 | ||||
| Store Equipment | 1,023,000 | Office Salaries Expense | 154,800 | ||||
| Accumulated Depreciation Store Equipment | 373,400 | Rent Expense | 79,800 | ||||
| Accounts Payable | 67,000 | Insurance Expense | 45,900 | ||||
| Customer Refunds Payable | 30,200 | Depreciation Expense Office Equipment | 32,400 | ||||
| Salaries Payable | 19,200 | Office Supplies Expense | 3,300 | ||||
| Note Payable (final payment due in five years) | 108,000 | Miscellaneous Administrative Expense | 3,800 | ||||
| Common Stock | 30,000 | Interest Expense | 24,000 |
Instructions:
1. Prepare single-step income statement in the format shown in Exhibit 8.
| Revenues: | ||
| Choose One: Cash Cost of goods sold Retained earnings Sales Selling expenses | $- | |
| Expenses: | ||
| Accounts receivable Cost of goods sold Merchandise inventory Note payable Sales discounts | $- | |
| Accounts payable Dividends Prepaid insurance Sales Selling expenses | -=? | |
| Administrative expenses Capital stock Salaries payable Sales Store equipment | =? | |
| Accumulated depreciation Interest expense Sales Sales discounts Sales returns and allowances | =? | |
| Total expenses | =? | |
| Net income Net loss | $- |
2. Prepare statement of stockholders' equity. No common stock was issued during the year. For those boxes in which no entry is required, leave the box blank.
| CHOOSE ONE: | Common Stock | Retained Earnings | Total |
| Balances, Oct. 1, 20Y7 Balances, Sept. 30, 20Y8 Dividends Net income Net loss | $- | $- | $- |
| Cash Dividends Net income Net loss Retained earnings | - ? | $- | - ? |
| Balances, Sept. 30, 20Y8 Dividends Net loss Retained earnings Total cash | - ? | - ? | - ? |
| Balances, Oct. 1, 20Y7 Balances, Sept. 30, 20Y8 Dividends Net income Net loss | $- | $- | $- |
10. The following selected accounts and their current balances appear in the ledger of Prescott Inc. for the fiscal year ended September 30, 20Y8:
| Cash | $104,375 | Retained Earnings | $ 317,250 | ||||
| Accounts Receivable | 187,500 | Dividends | 156,250 | ||||
| Inventory | 475,000 | Sales | 4,458,750 | ||||
| Estimated Returns Inventory | 43,750 | Cost of Goods Sold | 2,718,750 | ||||
| Office Supplies | 18,750 | Sales Salaries Expense | 486,000 | ||||
| Prepaid Insurance | 15,000 | Advertising Expense | 57,375 | ||||
| Office Equipment | 144,000 | Depreciation Expense Store Equipment | 10,375 | ||||
| Accumulated Depreciation Office Equipment | 61,875 | Miscellaneous Selling Expense | 2,500 | ||||
| Store Equipment | 639,375 | Office Salaries Expense | 96,750 | ||||
| Accumulated Depreciation Store Equipment | 233,375 | Rent Expense | 49,875 | ||||
| Accounts Payable | 60,750 | Insurance Expense | 28,688 | ||||
| Customer Refunds Payable | 43,750 | Depreciation Expense Office Equipment | 20,250 | ||||
| Salaries Payable | 12,000 | Office Supplies Expense | 2,062 | ||||
| Note Payable (final payment due in five years) | 67,500 | Miscellaneous Administrative | 2,375 | ||||
| Common Stock | 18,750 | Interest Expense | 15,000 |
Instructions:
1. Prepare single-step income statement in the format shown in Exhibit 8.
| Revenues: | ||
| Cash Cost of goods sold Retained earnings Sales Selling expenses | $=? | |
| Expenses: | ||
| Accounts receivable Cost of goods sold Inventory Note payable Sales discounts | $- =? - | |
| Accounts payable Dividends Prepaid insurance Net sales Selling expenses | - =? - | |
| Administrative expenses Common stock Salaries payable Sales Store equipment | - =? - | |
| Accumulated depreciation Interest expense Sales Sales discounts Sales returns and allowances | - =? - | |
| Total expenses | =? | |
| Net income Net loss | $- =? - |
2. Prepare. statement of stockholders' equity. No common stock was issued during the year. For those boxes in which no entry is required, leave the box blank.
| Common Stock | Retained Earnings | Total | |
| Balances, Oct. 1, 20Y7 Balances, Sept. 30, 20Y8 DividendsNet income Net loss | $- =? - | - =? - | - =? - |
| Cash Dividends Net income Net loss Retained earnings | - =? - | - =? - | - =? - |
| Balances, Oct. 1, 20Y7 Cash Dividends Net loss Total cash | - =? - | - =? - | - =? - |
| Balances, Oct. 1, 20Y7 Balances, Sept. 30, 20Y8 Dividends Net income Net loss | $- =? - | - =? - | - -=? |
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Audit Sampling
Authors: Ray Whittington, Dan M Guy, D R Carmichael
5th Edition
047137590X, 9780471375906
