Introduction to Financial Accounting (ACC 201) Spring 2017/18 Chapter 5 Accounting for Merchandising Operations Completing the Accounting Cycle & Forms of financial Statement Exercises Ex. 1 Presented below is information related to Hurley Co. for the month of January 2012. Ending inventory per perpetual records $ 21,600; Insurance expense $ 12,000; Rent expense 20,000; Ending inventory actually on hand 21,000; Salaries and wages expense 55,000; Sales discounts 10,000 Cost of goods sold 218,000; Sales returns and allowances 13,000; Freight-out 7,000; Sales revenue 380,000. Instructions a. Prepare the necessary adjusting entry for inventory. b. Prepare the necessary closing entries. Ex. 2 Presented below is information for Jorge Company for the month of March 2012. Cost of goods sold $212,000; Rent expense $ 32,000; Freight-out 7,000; Sales discounts 8,000; Insurance expense 6,000; Sales returns and allowances 13,000; Salaries and wages expense 58,000; Sales revenue 380,000. Instructions a. Prepare a multiple-step income statement. b. Compute the gross profit rate. Ex. 3 The adjusted trial balance of King Cornelius Company follows: KING CORNELIUS COMPANY Adjusted Trial Balance December 31, 2014 Cash $ 5,600 Accounts receivable 37,100 Inventory 25,800 Supplies 1,300 Prepaid rent 1,000 Furniture 26,500 Accumulated depreciation $ 23,800 Accounts payable 6,300 Salary payable 2,000 Interest payable 600 Unearned sales revenue 2,400 Note payable, long-term 35,000 K. Cornelius, Capital 22,200 K. Cornelius, Drawing 48,000 Sales revenue 244,000 Interest revenue 2,000 Sales discounts 10,000 Sales returns and allowances 8,000 Cost of goods sold 81,000 Salary expense 72,700 Rent expense 7,700 Depreciation expense 2,700 Utilities expense 5,800 Supplies expense 2,200 Interest expense 2,900 Total $338,300 $338,300 Requirements 1. Journalize the closing entries at December 31. Post to the Income summary account as an accuracy check on net income. Recall that the credit balance closed out of Income summary should equal net income as computed on the income statement. 2. Prepare the companys multi-step income statement, and balance sheet in account form. Draw arrows linking the statements. (Note: King Cornelius doesnt separate its operating expenses as either selling or general).