Accounting Principles I (ACC 111) Accounting for Merchandising Businesses (Chapter 5) Homework Problems Problem 5-A Calculating Merchandise Income Statement Amounts The following data was taken from the accounting records of Cornflower Company for the month ended December 31 of the current year. Merchandise Inventory, December 1 $ 9,000 Merchandise inventory, December 31 5,000 Purchases 87,000 Purchases returns 3,000 Purchases discounts 1,000 Sales 200,000 Freight-in 2,000 Requirements: 5) Calculate Cornflower's cost of merchandise purchased for December. 6) Calculate Cornflower's cost of merchandise sold for December. 7) Calculate Cornflower's gross profit for December. Problem 5-B Merchandise Business Financial Statements 300 The following accounts and balances were found in the Sienna Company's accounting records for the year ended December 31 of the current year. Accounts payable $ 20 Accounts receivable 140 Accumulated depreciation - equipment 200 Advertising expense 200 Cash Common stock 100 Cost of merchandise sold 6,000 Depreciation expense - equipment Dividends 700 Equipment 800 Interest expense 20 Merchandise inventory 150 Miscellaneous selling expense 300 Notes payable 250 Office rent expense 100 Office salaries expense 700 Prepaid rent 10 Retained earnings, January 1 300 Salaries payable 130 Sales 10,000 Sales commissions expense 1,500 Requirements: 1) Prepare a multiple-step income statement. 2) Prepare a retained earnings statement. 3) Prepare a classified balance sheet, assuming that $25 of the note payable is due next year and the balance due during the next decade