A) How do you calculate Net Sales? Enter the following transactions in the financial statement model below. 1. Purchased $60,000 of merchandise inventory on account, terms 2/10,n/30. 2. The goods purchased in event 1 were delivered FOB shipping point. Freight costs of $1,500 were paid in cash by the responsible party. 3. Returned $3,000 of goods purchased in event 1. 4. Recorded the cash discount on the goods purchased in event 1 Paid the balance due on event 1 . 5. Sold $59,000 of merchandise that had cost $45,000. 6. The goods sold in event 5 were sold to customers FOB destination. Freight costs of $1,400 were paid in cash by the responsible party. 7. Paid cash of $9,000 for selling and administrative expenses. 8. Sold the land for 514,500 cash. i. Prepare the company's multi-step income statement on the next page. ii. What is the gross margin percentage? If the company's gross margin in the previous year was 30%, is it likely the prices are going up or down? iii. What other non-operating item might be included in Non-operating Items? vi. Assuming a 5% growth rate, what is the amount of net income expected for next year? B) The following transactions occurred in year 3 Beginning 200 units @$120=$24,000 Purchased 130 units @ \$124=\$16,120 Purchased 220 units @$128=28,160 Sold 350 units @ $320 cash =$112,000 Required: 1. Compute the ending inventory, assuming a) FIFO b) Weighted-average cost flows - round calculations of unit cost average to 2 decimal places. 2. Record the journal entry for the sale using the FIFO method. a. The lower of cost or market applied to individual inventory items =$ b. Record the journal entry for the LCM adjustment applied to individual items. Ratios a. Calculate the inventory turnover for 2021 and 2020. b. Calculate the average days to sell inventory for 2021 and 2020 . Based on your computations in a and b, did the inventory management get better or worse? c. Calculate the accounts receivable turnover for 2021 and 2020 . d. Calculate the average days to collect receivables for 2021 and 2020. e. What does the A/R turnover tell us? Does the change in days to collect ratio mean the company is more successful? D) Enter the following transactions in the spreadsheet below. a. Sold merchandise at a price above cost by credit card, less fee. Receipts have not yet been sent to the credit card company. b. Submitted receipts to the credit card company an received cash. c. Lent an employee cash for one year at 5% interest. d. Accrued six months interest on the loan. e. Wrote off an uncollectible account. f. Recovered the uncollectible account previously written off. g. Recorded the adjustment to estimate uncollectible accounts. 2. If uncollectible accounts are estimated to be 1% of Accounts Receivable (100,000 balance) and the Allowance for Doubtful Accounts has a debit balance of \$200, enter the journal entry for year 1. In year 2,$500 is written off. Record the journal entry. 3. If the loan in event c was for $10,000 July 1 , and December 31 is the year end, what would be the journal entry for receiving repayment of the note. E) Exercises 6-2B, 6-4B, 6-5B, 6-6B A) How do you calculate Net Sales? Enter the following transactions in the financial statement model below. 1. Purchased $60,000 of merchandise inventory on account, terms 2/10,n/30. 2. The goods purchased in event 1 were delivered FOB shipping point. Freight costs of $1,500 were paid in cash by the responsible party. 3. Returned $3,000 of goods purchased in event 1. 4. Recorded the cash discount on the goods purchased in event 1 Paid the balance due on event 1 . 5. Sold $59,000 of merchandise that had cost $45,000. 6. The goods sold in event 5 were sold to customers FOB destination. Freight costs of $1,400 were paid in cash by the responsible party. 7. Paid cash of $9,000 for selling and administrative expenses. 8. Sold the land for 514,500 cash. i. Prepare the company's multi-step income statement on the next page. ii. What is the gross margin percentage? If the company's gross margin in the previous year was 30%, is it likely the prices are going up or down? iii. What other non-operating item might be included in Non-operating Items? vi. Assuming a 5% growth rate, what is the amount of net income expected for next year? B) The following transactions occurred in year 3 Beginning 200 units @$120=$24,000 Purchased 130 units @ \$124=\$16,120 Purchased 220 units @$128=28,160 Sold 350 units @ $320 cash =$112,000 Required: 1. Compute the ending inventory, assuming a) FIFO b) Weighted-average cost flows - round calculations of unit cost average to 2 decimal places. 2. Record the journal entry for the sale using the FIFO method. a. The lower of cost or market applied to individual inventory items =$ b. Record the journal entry for the LCM adjustment applied to individual items. Ratios a. Calculate the inventory turnover for 2021 and 2020. b. Calculate the average days to sell inventory for 2021 and 2020 . Based on your computations in a and b, did the inventory management get better or worse? c. Calculate the accounts receivable turnover for 2021 and 2020 . d. Calculate the average days to collect receivables for 2021 and 2020. e. What does the A/R turnover tell us? Does the change in days to collect ratio mean the company is more successful? D) Enter the following transactions in the spreadsheet below. a. Sold merchandise at a price above cost by credit card, less fee. Receipts have not yet been sent to the credit card company. b. Submitted receipts to the credit card company an received cash. c. Lent an employee cash for one year at 5% interest. d. Accrued six months interest on the loan. e. Wrote off an uncollectible account. f. Recovered the uncollectible account previously written off. g. Recorded the adjustment to estimate uncollectible accounts. 2. If uncollectible accounts are estimated to be 1% of Accounts Receivable (100,000 balance) and the Allowance for Doubtful Accounts has a debit balance of \$200, enter the journal entry for year 1. In year 2,$500 is written off. Record the journal entry. 3. If the loan in event c was for $10,000 July 1 , and December 31 is the year end, what would be the journal entry for receiving repayment of the note. E) Exercises 6-2B, 6-4B, 6-5B, 6-6B