Accounting 255 Comprehensive Problem 2
Page 124 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) COMPREHENSIVE PROBLEM 2 REQUIREMENTS (1) Prepare journal entries to record the merchandising transactions below for March 2020, suming that the perpetual inventory system is used check figure Total Debits $200.910. (2) Prepare journal entries to record additional transactions (a) and (b) on the following page for Accounts Receivable related to uncollectible accounts (3) Tr Sports Gear, Inc.'s fiscal year ends on December 31. Using the December 31, 2020 Adjusted Trial Balance (accounts listed in alphabetical order), prepare in good form, the 2020 fiscal year financial statements: (a) Detailed, Multistep Income Statement include earnings per share there were 60 000 shares of common stock outstanding throughout the year: Check fisure: Net Income $91,655. (b) Retained Earnings Statement: Check figure Retained Earnings, December 31, 2020 - 5413,410. (c) Classified Balance Sheet: Check figure: Total Assets : $635.525. Calculate liquidity, profitability, & solvency measures: show all calculations and use the proper notation for each answer (% times, $). Round your final answer to at least one decimal placa (s. for a ratio stated as a percentage, show an amount calculated to be .10463 as 10.5%) TRANSACTIONS FOR REQUIREMENT (1) Presented below are selected inventory transactions pertaining to Tri Sports Gear, Inc. for the month of March 2020 Mar. 2 Purchased $58,700 of merchandise on account from RunQuick, terms 1/10, net 30,FOB Destination Returned $28,000 of merchandise to RunQuick for credit on account. Sold $6,250 of merchandise for cash, FOB Destination Cost of merchandise was $3,375. Paid $375 to UPS for shipping cost related to merchandise sold on March 6. Paid RunQuick the balance due from the March 2 purchase less the March 5 return (hint: payment is within the discount period). Sold $19,600 of merchandise on credit to the USA Olympic triathlon team, terms 2/10.net 30, FOB Shipping Point. Cost of merchandise was $8,820. Purchased merchandise from Specialized Bikes, $23,450 cash, FOB Shipping Point. The USA team returned $4,000 of merchandise sold on March 12 for credit on their account Cost of merchandise returned $1,800. 20 23 Paid $240 to FedEx for shipping cost related to purchase on March 13. Received payment in full from the USA team for the balance due from the March 12 sale less the March 19 return (hint: payment received within the discount period). COMPREHENSIVE PROBLEM 2 CHAPTERS 2. 5. 6. 8) TRANSACTIONS FOR REQUIREMENT : As that the Sports Gear has a beginning of the year balance in Almance for 34875. On December 31, the following events occurred related to recevable Account a) Record the write-off of $2.635 of accounts recevable from customers D) After recording (a) above the following aging schedule of accounts receivable is provided Prepare the year and adjusting relantry for bad debts using the allowance method, using the percentage of receivables boss from the aging schedule. Accounts Receivable $29,500 Estimated Percentage Uncollectible Estimated Uncollectible Amount Current Accounts 1 - 30 days past due 11 200 31-60 days past due 25% 61-90 days past due Over 90 days past due Totals 6,850 4.780 3.200 555530 80% INFORMATION FOR REQUIREMENT (3) After the transactions from requirements (1) and (2) above and other transactions for the year were posted to the accounts, the accounts in alphabetical order from the December 31, 2020 year-end adjusted trial balance of Tri Sports Gear, Inc. are as follows DEBIT CREDIT $ 42.750 $ 55,530 TRI SPORTS GEAR, INC. ADJUSTED TRIAL BALANCE DECEMBER 31, 2020 ACCOUNT TITLES Accounts Payable Accounts Receivable Accrued Liabilities Accumulated Depreciation - Equipment Accumulated Depreciation - Vehicles Advertising Expense Allowance for Doubtful Accounts Bad Debt Expense Cash Common Stock (60,000 shares outstanding) Copyright 6,200 35,360 22 890 52.960 5,590 3,350 21,635 60,000 72,300 Page 126 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 6) ACCOUNT TITLES DEBIT Cost of Goods Sold Depreciation Experte Dividends Equipment Franchise 37500 55.000 82000 12.500 28,770 18.000 3.250 109.560 130.500 9.750 56 500 98 000 Freight-out Expense Goin on the sale of Equipment Income Taxes Expense Income Taxes Payable Insurance Expense Interest Expense Interest Revenue Inventory Land (not currently used in operations) Legal Service Expense Long-Term Investments in Bonds Notes Payable ($10,000 due in next year) Notes Receivable to be received in 9 months) Prepaid Insurance Rent Expense Retained Earnings (beginning balance) Salaries & Wages Expense Sales Discount Sales Returns Sales Revenue Stock Investments (short-term) Supplies Supplies Expense Unearned Revenue Utilities Expense Vehicles 4200 5,800 26.200 359,255 169,865 22 315 98,250 1215 625 26000 11 800 15.450 13580 10.145 68,540 Totals $ 1.866.020 $ 1.866.020 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) Page 127 DEBIT CREDIT DATE 2020 GENERAL JOURNAL ACCOUNT TITLES REQUIREMENT (1) JOURNAL ENTRIES Merchandise COMPREHENSIVE PROBLEM 2 LAPTERS 2. 5. 6.) Page 126 Page 128 COMPREHENSIVE PROBLEM 2 CHAPTERS 2, 5, 6, 8) GENERAL JOURNAL ACCOUNT TITLES DATE DEBIT 2020 REQUIREMENT (2) JOURNAL ENTRIES: COMPREHENSIVE PROBLEM 2 CHAPTERS 2. 5. 6. 5) Page 19 TRT SPORTS GEAR IN INCOME STATEMENT Complete the date line COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) INCOME STATEMENT CONTINUED) TRI SPORTS GEAR, INC. RETAINED EARNINGS STATEMENT Complete the date line COMPRENSIVE FOREMATES 68) COMPREHENSIVE PROBLEM 2 CHAPTERS 2. 5. 6. 8) Page 133 REQUIREMENT (4) FINANCIAL MEASURES Show all calculations Refer to page 74 in the course pocket for a summary of Patio formulas. Show your answer using the proper notation and round your final answer to one decimal place. Place your answers in the spaces provided for each ratio CALCULATIONI ANSWER: MEASURE LIQUIDITY Working Capital Current Ratio $47.000) Receivable Turnover Ratio (note beginning net accounts receivable (use net sales) Average collection Period Inventory Turnover Ratio (note: beginning inventory . $112,840) Days in Inventory PROFITABILITY Gross Profit Rate Profit Margin SOLVENCY Debt to Assets Page 124 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) COMPREHENSIVE PROBLEM 2 REQUIREMENTS (1) Prepare journal entries to record the merchandising transactions below for March 2020, suming that the perpetual inventory system is used check figure Total Debits $200.910. (2) Prepare journal entries to record additional transactions (a) and (b) on the following page for Accounts Receivable related to uncollectible accounts (3) Tr Sports Gear, Inc.'s fiscal year ends on December 31. Using the December 31, 2020 Adjusted Trial Balance (accounts listed in alphabetical order), prepare in good form, the 2020 fiscal year financial statements: (a) Detailed, Multistep Income Statement include earnings per share there were 60 000 shares of common stock outstanding throughout the year: Check fisure: Net Income $91,655. (b) Retained Earnings Statement: Check figure Retained Earnings, December 31, 2020 - 5413,410. (c) Classified Balance Sheet: Check figure: Total Assets : $635.525. Calculate liquidity, profitability, & solvency measures: show all calculations and use the proper notation for each answer (% times, $). Round your final answer to at least one decimal placa (s. for a ratio stated as a percentage, show an amount calculated to be .10463 as 10.5%) TRANSACTIONS FOR REQUIREMENT (1) Presented below are selected inventory transactions pertaining to Tri Sports Gear, Inc. for the month of March 2020 Mar. 2 Purchased $58,700 of merchandise on account from RunQuick, terms 1/10, net 30,FOB Destination Returned $28,000 of merchandise to RunQuick for credit on account. Sold $6,250 of merchandise for cash, FOB Destination Cost of merchandise was $3,375. Paid $375 to UPS for shipping cost related to merchandise sold on March 6. Paid RunQuick the balance due from the March 2 purchase less the March 5 return (hint: payment is within the discount period). Sold $19,600 of merchandise on credit to the USA Olympic triathlon team, terms 2/10.net 30, FOB Shipping Point. Cost of merchandise was $8,820. Purchased merchandise from Specialized Bikes, $23,450 cash, FOB Shipping Point. The USA team returned $4,000 of merchandise sold on March 12 for credit on their account Cost of merchandise returned $1,800. 20 23 Paid $240 to FedEx for shipping cost related to purchase on March 13. Received payment in full from the USA team for the balance due from the March 12 sale less the March 19 return (hint: payment received within the discount period). COMPREHENSIVE PROBLEM 2 CHAPTERS 2. 5. 6. 8) TRANSACTIONS FOR REQUIREMENT : As that the Sports Gear has a beginning of the year balance in Almance for 34875. On December 31, the following events occurred related to recevable Account a) Record the write-off of $2.635 of accounts recevable from customers D) After recording (a) above the following aging schedule of accounts receivable is provided Prepare the year and adjusting relantry for bad debts using the allowance method, using the percentage of receivables boss from the aging schedule. Accounts Receivable $29,500 Estimated Percentage Uncollectible Estimated Uncollectible Amount Current Accounts 1 - 30 days past due 11 200 31-60 days past due 25% 61-90 days past due Over 90 days past due Totals 6,850 4.780 3.200 555530 80% INFORMATION FOR REQUIREMENT (3) After the transactions from requirements (1) and (2) above and other transactions for the year were posted to the accounts, the accounts in alphabetical order from the December 31, 2020 year-end adjusted trial balance of Tri Sports Gear, Inc. are as follows DEBIT CREDIT $ 42.750 $ 55,530 TRI SPORTS GEAR, INC. ADJUSTED TRIAL BALANCE DECEMBER 31, 2020 ACCOUNT TITLES Accounts Payable Accounts Receivable Accrued Liabilities Accumulated Depreciation - Equipment Accumulated Depreciation - Vehicles Advertising Expense Allowance for Doubtful Accounts Bad Debt Expense Cash Common Stock (60,000 shares outstanding) Copyright 6,200 35,360 22 890 52.960 5,590 3,350 21,635 60,000 72,300 Page 126 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 6) ACCOUNT TITLES DEBIT Cost of Goods Sold Depreciation Experte Dividends Equipment Franchise 37500 55.000 82000 12.500 28,770 18.000 3.250 109.560 130.500 9.750 56 500 98 000 Freight-out Expense Goin on the sale of Equipment Income Taxes Expense Income Taxes Payable Insurance Expense Interest Expense Interest Revenue Inventory Land (not currently used in operations) Legal Service Expense Long-Term Investments in Bonds Notes Payable ($10,000 due in next year) Notes Receivable to be received in 9 months) Prepaid Insurance Rent Expense Retained Earnings (beginning balance) Salaries & Wages Expense Sales Discount Sales Returns Sales Revenue Stock Investments (short-term) Supplies Supplies Expense Unearned Revenue Utilities Expense Vehicles 4200 5,800 26.200 359,255 169,865 22 315 98,250 1215 625 26000 11 800 15.450 13580 10.145 68,540 Totals $ 1.866.020 $ 1.866.020 COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) Page 127 DEBIT CREDIT DATE 2020 GENERAL JOURNAL ACCOUNT TITLES REQUIREMENT (1) JOURNAL ENTRIES Merchandise COMPREHENSIVE PROBLEM 2 LAPTERS 2. 5. 6.) Page 126 Page 128 COMPREHENSIVE PROBLEM 2 CHAPTERS 2, 5, 6, 8) GENERAL JOURNAL ACCOUNT TITLES DATE DEBIT 2020 REQUIREMENT (2) JOURNAL ENTRIES: COMPREHENSIVE PROBLEM 2 CHAPTERS 2. 5. 6. 5) Page 19 TRT SPORTS GEAR IN INCOME STATEMENT Complete the date line COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5, 6, 8) INCOME STATEMENT CONTINUED) TRI SPORTS GEAR, INC. RETAINED EARNINGS STATEMENT Complete the date line COMPRENSIVE FOREMATES 68) COMPREHENSIVE PROBLEM 2 CHAPTERS 2. 5. 6. 8) Page 133 REQUIREMENT (4) FINANCIAL MEASURES Show all calculations Refer to page 74 in the course pocket for a summary of Patio formulas. Show your answer using the proper notation and round your final answer to one decimal place. Place your answers in the spaces provided for each ratio CALCULATIONI ANSWER: MEASURE LIQUIDITY Working Capital Current Ratio $47.000) Receivable Turnover Ratio (note beginning net accounts receivable (use net sales) Average collection Period Inventory Turnover Ratio (note: beginning inventory . $112,840) Days in Inventory PROFITABILITY Gross Profit Rate Profit Margin SOLVENCY Debt to Assets
