Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicat Required information PA6-1 Reporting Purchase Transactions between Wholesale and Retail Merchandisers Using Perpetual Inventory Systems (LO 6-3) [The following information applies to the questions displayed below.] The ti nsactions listed below are typical of those involving New Books Inc. and Readers Corner. New Books is a wholesale merchandiser and Readers' Corner is a retail merchandiser. Assume all sales of merchandise from New Books to Readers' Corner are made with terms n/30, and the two companies use perpetual inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended August 31. a. New Books sold merchandise to Readers Corner at a selling price of $555,000. The merchandise had cost New Books $417,000 b. Two days later, Readers' Corner complained to New Books that some of the merchandise differed from what Readers' Corner had ordered, New Books agreed to give an allowance of $10,500 to Readers' Corner. Readers' Corner also returned some books, which had cost New Books $2,100 and had been sold to Readers' Corner for $3,600. C. Just three days later, Readers' Corner paid New Books, which settled all amounts owed. PA6-1 Part 2 arch O PA6-1 Part 2 2. Prepare the journal entries that Readers' Corner would record. (If no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.) Answer is complete but not entirely correct. NO ransaction General Journal Credit Debit 555 000 Inventory Accounts Payable 555,000 2 b Accounts Payable Inventory 19,500 10,500 Accounts Payable Cash 544,500 544,500 Homework Saved a New Books sold merchandise to Readers Comer at a selling price of $620,000. The merchandise had cost New Books $443,000 b. Two days later, Readers' Corner complained to New Books that some of the merchandise differed from what Readers' Comer had ordered New Books agreed to give an allowance of $10,500 to Readers' Corner Readers' Corner also returned some books, which had cost New Books $3,400 and had been sold to Readers' Corner for $4.900. c. Just three days later, Readers' Corner paid New Books, which settled all amounts owed. PA6-2 l art 1 Required: 1. For each of the events (a) through (d), indicate the amount and direction of the effect on New Books in terms of the following items. (Enter any decreases to account balances with a minus sign.) Transaction Sales Revenues Sales Returns Sales Allowances Net Sales Cost of Goods Sold Gross Profit b C Homework 1 Saved a. New Books sold merchandise to Readers' Comer at a selling price of $620,000. The merchandise had cost New Books $443,000 b. Two days later, Readers' Comer complained to New Books that some of the merchandise differed from what Readers' Comer had ordered, New Books agreed to give an allowance of $10,500 to Readers' Comer Readers' Comer also returned some books, which had cost New Books $3,400 and had been sold to Readers' Corner for $4.900. Just three days later, Readers' Corner paid New Books, which settled all amounts owed. PA6-2 Part 2 2. Prepare the journal entries to record New Books transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.) View transaction list Journal entry worksheet Homework Saved PA6-3 Recording Sales with Discounts and Returns and Analyzing Gross Profit Percentage [LO 6-4, LO 6- 5) [The following information applies to the questions displayed below) Hair World Inc. is a wholesaler of hair supplies. Hair World uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: $55,200 a: Sold merchandise for cash (cost of merchandise $30,797). b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $390 ). Sold merchandise (costing $5,225 ) to a customer on account with terms n/60. d. Collected half of the balance owed by the customer in (c) 6. Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. 650 11,000 5,500 176 PA6-3 Part 3 3. Prepare journal entries to record transactions (a)-(e). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Next > Hunting to credit sales the customer in (c) had not yet paid. 5.500 176 PA6-3 Part 4 4. Hair World is considering a contract to sell merchandise to a hair salon chain for $16,000. This merchandise will cost Hair World $10.480. What would be the increase (or decrease) to Hair World's gross profit and gross profit percentage? (Round "Gross Profit Percentage" to 1 decimal place.) by Gross Profit Boss Profit Percentage to search BE PA6-4 Recording Journal Entry after Allocating Transaction Price to Performance Obligations [LO 6-5] [The following information applies to the questions displayed below.] Hospital Equipment Company (HEC) acquired several fMRI machines for its inventory at a cost of $3,500 per machine. HEC usually sells these machines to hospitals at a price of $6,880. HEC also separately sells 12 months of training and repair services for fMRI machines for $1720. HEC is paid $6,880 cash on November 30 for the sale of an fMRI machine delivered on December 1. HEC sold the machine at its regular price, but included one year of free training and repair service. PA6-4 Part 1 Required: 1. For the machine sold at its regular price, but with one year of "free" training and repair service, determine the dollar amount of revenue earned from the equipment sale versus the revenue earned from the training and repair services. Allocated Transaction Price quipment Service Saved Required information PA6-4 Recording Journal Entry after Allocating Transaction Price to Performance Obligations [LO 6-5) [The following information applies to the questions displayed below.) Hospital Equipment Company (HEC) acquired several fMRI machines for its inventory at a cost of $3,500 per machine. HEC usually sells these machines to hospitals at a price of $6,880. HEC also separately sells 12 months of training and repair services for fMRI machines for $1.720. HEC is paid $6,880 cash on November 30 for the sale of an fMRI machine delivered on December 1. HEC sold the machine at its regular price, but included one year of free training and repair service. PAG-4 Part 2 2. Prepare journal entries would HEC record on November 30 and December 1? (Assume HEC uses a perpetual inventory system for recording the cost of goods sold.) (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 O BE Sovod [The following information applies to the questions displayed below.) Big Tommy Corporation is a local grocery store organized seven years ago as a corporation. The bookkeeper prepared the following statement at year-end (assume that all amounts are correct, but note the incorrect format): BIG TOMMY CORPORATION Profit and Loss December 31 Debit Credit $281, 2ee Net Sales Cost of Goods Sold Salaries and Wages Expense Office Expenses Travel Expenses Income Tax Expense Net Profit Totals $215,000 42,800 4,000 1, BD 5,760 13,440 $281,200 $281,200 PA6-5 Part 1 Required: 1. Prepare a properly formatted multistep income statement that would be used for external reporting purposes. BIG TOMMY CORPORATION Income Statement 10 Big Tommy Corporation is a local grocery store organized seven years ago as a corporation. The bookkeeper prepared the following statement at year-end (assume that all amounts are correct, but note the incorrect format): BIG TOMMY CORPORATION Profit and Loss December 31 Debit Credit $281,200 Net Sales Cost of Goods Sold Salaries and Wages Expense office Expenses Travel Expenses Income Tax Expense Net Profit Totals $215,000 42,000 4,000 1,000 5,760 13,440 $281,200 $281,200 PA6-5 Part 2 2. Compute the gross profit percentage. (Round your answer to 1 decimal place.) Gross Profit Percentage % 11