LO 42, 43, 44 en 4-24 Casiweze w Portalem of 2016 Company of the flowing his 15.000 7.000 13.000 D016.ecome period the following event Lucy 1.200 from Company The methode de Oppo F10 were 2 R$200 of the very that he hadapan The word tot un An scope to Home Compuy within the cash dep Sottory that hal 6.700 for 517,100 cender 30, Bed and from a com. The mechandise originally com 1000 and Die derde sig om of Sweden Cold them the cover within the period sol land 56,30 Reinders of It Tok piacoming and at the end of Identify each of it (AS, CAUSA tam Alopinbow each event would affiancata pagare, or NA koralleled ch of the compe www.sportwere to distinguish the part. The first time sample M Read the reforma Opening and post the beginning to the Preparation, of changing kho khan, H 4 gian v anh luat cond and post and programe LO 4-2, 4-3, 4-4,4-5 Exercise 4-17A Comprehensive exercise with sales discounts Junker's Stash started the 2016 accounting period with the balances given in the financial state. ments model shown below. During 2016 Junker's Stash experienced the following business events. 1. Paid cash to purchase $70,000 of merchandise inventory 2. The goods that were purchased in Event I were delivered FOB destination. Freight costs of $1,400 were paid in cash by the responsible party, 3a. Sold merchandise for $72,000 under terms 1/10, 1/30. 3b. Recognized $41,900 of cost of goods sold. 4a. Junker's Stash customers returned merchandise that was sold for $2,100. 46. The merchandise returned in Event 4a had cost Junker's Stash $1,250. 5. The merchandise in Event 3a was sold to customers FOB destination. Freight costs of $1,650 were paid in cash by the responsible party, 6a. The customers paid for the merchandise sold in Event 3a within the discount period. Recog. nized the sales discount 6b. Collected the balance in the accounts receivable account. 7. Paid cash of $6,850 for selling and administrative expenses 8. Sold the land for $9,100 cash. Required a. Record the above transactions in a financial statements model like the one shown below: Hw Event No. Accts. Rec. Rev. Gain Cash + 80,000+ Com. Ret. Stk. + Eam. 70,000 + 36,000 + Inventory + Land - 15,000 + 11,000 Exp. - Net Inc. NA NA Cash Flow NA Bal 0 + NA 6. Determine the amount of net sales. c. Prepare a multistep income statement. Include common size percentages on the income state- ment. d. Junker's Stash return on sales ratio in 2015. was 12 percent. Based on the common size data in the income statement, did Junker's Stash expenses increase or decrease in 2016? e. Explain why the term loss is used to describe the results due to the sale of land. 249 Accounting for Merchandising Businesses Exercise 4-14A Sales returns, discounts, gain, and a multistep income statement LO 4-2, 4-3 The following information was drawn from the 2016 accounting records of Ozark Merchandiser 1. Inventory that had cost $21,200 was sold for $39,900 under terms 2/20, net/30 2. Customers returned merchandise to Ozark five days after the purchase. The merchandise had been sold for a price of $1,520. The merchandise had cost Ozark 5920.. 3. All customers paid their accounts within the discount period 4. Selling and administrative expenses amounted to $4,200. 5. Interest expense paid amounted to $360 6 Land that had cost $8,000 was sold for 59,250 cash. Required a. Determine the amount of net sales. Prepare a multistep income statement. Where would the interest expense be shown on the statement of cash flows? d. How would the sale of the land be shown on the statement of cash flows? c. Explain the difference between a gain and revenue. 14B-HO LO 4-2, 4-3 Exercise 4-7B Effect of purchase returns and allowances and freight costs on the journal, ledger, and financial statements: Perpetual system The trial balance for The Bolt Co, as of January 1, 2016, was as follows: Account Titles Debit Credit Cash $12,000 Inventory 6,000 Common Stock $15,000 Retained Earnings 3,000 Total $18.000 $18,000 258 Chapter 4 The following events affected the company during the 2016 accounting period: 1. Purchased merchandise on account that cost $8,200. 2. The goods in Event I were purchased FOB shipping point with freight cost of $600 cash. 3. Returned $800 of damaged merchandise for credit on account 4. Agreed to keep other damaged merchandise for which the company received a $400 allowance 5. Sold merchandise that cost $5,500 for $9,500 cash. 6. Delivered merchandise to customers under terms FOB destination with freight costs amount- ing to $300 cash 7. Paid $5,000 on the merchandise purchased in Event Required 1. Record the transactions in general journal format. b. Open general ledger T-accounts with the appropriate beginning balances, and post the jour- nal entries to the T-accounts. c. Prepare an income statement and statement of cash flows for 2016, d. Explain why a difference does or does not exist between net income and net cash flow from operating activities 247 LO 4-2 Accounting for Merchandising Businesses Exercise 4-8A Effect of product cost and period cost: Horizontal statements model The Pet Store experienced the following events for the 2016 accounting period: 1. Acquired $60,000 cash from the issue of common stock. 2. Purchased $65,000 of inventory on account 3. Received goods purchased in Event 2 FOB shipping point, freight cost ol.8900 paid in cash 4. Sold inventory on account that cost $38,000 for $71,000. S. Freight cost on the goods sold in Event 4 was $620. The goods were shipped FOB destina- tion. Cash was paid for the freight cost. 6. Customer in Event 4 returned 54,200 worth of goods that had a cox of 52,150. 7. Collected $58,300 cash from accounts receivable 8. Paid $59.200 cash on accounts payable 9. Paid $2,600 for advertising expense 10. Paid $3,100 cash for insurance expense. 9A 9B Hw 7A TB tw Required Which of these events affect period (selling and administrative) costs? Which result in prod. uct costs? If neither, label the transaction NA Record each event in a horizontal statements model like the following one. The first event is recorded as an example Assets Liab. Equity Rev. - Exp. + Acets. Rec. + Inv. - Accts. Pay. + C. Stk. + Ret. Earn. 60,000+ NA + 60,000 + Net Inc. Cash Flow Cash NA NA + NA NA NA NA 60,000 FA LO 4-2 Exercise 4-9 Effect of product cost and period cost: Horizontal statements model Wild Rose Co experienced the following events for the 2016 accounting period: 1. Acquired S20,000 cash from the issue of common stock 2. Purchased 536,000 of inventory on account 3. Received goods purchased in Event 2 FOB shipping point. Freight cost of $900 paid in cash. 4. Returned $4,000 of goods purchased in Event 2 because of poor quality 5. Sold inventory on account that cost $28,000 for $82,000 Freight cost on the goods sold in Event 5 was $200. The goods were shipped FOB destina- tion. Cash was paid for the freight cost. 7. Collected $33,000 cash from accounts receivable 8. Paid $27.000 cash on accounts payable 9. Paid 54,500 for advertising expense 10. Paid S7,200 cash for insurance expense. Required 1. Which of these transactions affect period (selling and administrative) costs? Which result in product costs? If neither, label the transaction NA 259 Accounting for Merchandising Businesses b. Record each event in a horizontal statements model like the following one. The first event is recorded as an example Assets Liab. + Equity Rev.- Exp. = Net Inc. Cash Flow Inv. - Acts. Pay. + C.SK + Ret. Earn Cash + Accts. Res. 20,000+ NA + NA NA + 20.000 NA NA NA NA 20,000FA LO 42, 43, 44 en 4-24 Casiweze w Portalem of 2016 Company of the flowing his 15.000 7.000 13.000 D016.ecome period the following event Lucy 1.200 from Company The methode de Oppo F10 were 2 R$200 of the very that he hadapan The word tot un An scope to Home Compuy within the cash dep Sottory that hal 6.700 for 517,100 cender 30, Bed and from a com. The mechandise originally com 1000 and Die derde sig om of Sweden Cold them the cover within the period sol land 56,30 Reinders of It Tok piacoming and at the end of Identify each of it (AS, CAUSA tam Alopinbow each event would affiancata pagare, or NA koralleled ch of the compe www.sportwere to distinguish the part. The first time sample M Read the reforma Opening and post the beginning to the Preparation, of changing kho khan, H 4 gian v anh luat cond and post and programe LO 4-2, 4-3, 4-4,4-5 Exercise 4-17A Comprehensive exercise with sales discounts Junker's Stash started the 2016 accounting period with the balances given in the financial state. ments model shown below. During 2016 Junker's Stash experienced the following business events. 1. Paid cash to purchase $70,000 of merchandise inventory 2. The goods that were purchased in Event I were delivered FOB destination. Freight costs of $1,400 were paid in cash by the responsible party, 3a. Sold merchandise for $72,000 under terms 1/10, 1/30. 3b. Recognized $41,900 of cost of goods sold. 4a. Junker's Stash customers returned merchandise that was sold for $2,100. 46. The merchandise returned in Event 4a had cost Junker's Stash $1,250. 5. The merchandise in Event 3a was sold to customers FOB destination. Freight costs of $1,650 were paid in cash by the responsible party, 6a. The customers paid for the merchandise sold in Event 3a within the discount period. Recog. nized the sales discount 6b. Collected the balance in the accounts receivable account. 7. Paid cash of $6,850 for selling and administrative expenses 8. Sold the land for $9,100 cash. Required a. Record the above transactions in a financial statements model like the one shown below: Hw Event No. Accts. Rec. Rev. Gain Cash + 80,000+ Com. Ret. Stk. + Eam. 70,000 + 36,000 + Inventory + Land - 15,000 + 11,000 Exp. - Net Inc. NA NA Cash Flow NA Bal 0 + NA 6. Determine the amount of net sales. c. Prepare a multistep income statement. Include common size percentages on the income state- ment. d. Junker's Stash return on sales ratio in 2015. was 12 percent. Based on the common size data in the income statement, did Junker's Stash expenses increase or decrease in 2016? e. Explain why the term loss is used to describe the results due to the sale of land. 249 Accounting for Merchandising Businesses Exercise 4-14A Sales returns, discounts, gain, and a multistep income statement LO 4-2, 4-3 The following information was drawn from the 2016 accounting records of Ozark Merchandiser 1. Inventory that had cost $21,200 was sold for $39,900 under terms 2/20, net/30 2. Customers returned merchandise to Ozark five days after the purchase. The merchandise had been sold for a price of $1,520. The merchandise had cost Ozark 5920.. 3. All customers paid their accounts within the discount period 4. Selling and administrative expenses amounted to $4,200. 5. Interest expense paid amounted to $360 6 Land that had cost $8,000 was sold for 59,250 cash. Required a. Determine the amount of net sales. Prepare a multistep income statement. Where would the interest expense be shown on the statement of cash flows? d. How would the sale of the land be shown on the statement of cash flows? c. Explain the difference between a gain and revenue. 14B-HO LO 4-2, 4-3 Exercise 4-7B Effect of purchase returns and allowances and freight costs on the journal, ledger, and financial statements: Perpetual system The trial balance for The Bolt Co, as of January 1, 2016, was as follows: Account Titles Debit Credit Cash $12,000 Inventory 6,000 Common Stock $15,000 Retained Earnings 3,000 Total $18.000 $18,000 258 Chapter 4 The following events affected the company during the 2016 accounting period: 1. Purchased merchandise on account that cost $8,200. 2. The goods in Event I were purchased FOB shipping point with freight cost of $600 cash. 3. Returned $800 of damaged merchandise for credit on account 4. Agreed to keep other damaged merchandise for which the company received a $400 allowance 5. Sold merchandise that cost $5,500 for $9,500 cash. 6. Delivered merchandise to customers under terms FOB destination with freight costs amount- ing to $300 cash 7. Paid $5,000 on the merchandise purchased in Event Required 1. Record the transactions in general journal format. b. Open general ledger T-accounts with the appropriate beginning balances, and post the jour- nal entries to the T-accounts. c. Prepare an income statement and statement of cash flows for 2016, d. Explain why a difference does or does not exist between net income and net cash flow from operating activities 247 LO 4-2 Accounting for Merchandising Businesses Exercise 4-8A Effect of product cost and period cost: Horizontal statements model The Pet Store experienced the following events for the 2016 accounting period: 1. Acquired $60,000 cash from the issue of common stock. 2. Purchased $65,000 of inventory on account 3. Received goods purchased in Event 2 FOB shipping point, freight cost ol.8900 paid in cash 4. Sold inventory on account that cost $38,000 for $71,000. S. Freight cost on the goods sold in Event 4 was $620. The goods were shipped FOB destina- tion. Cash was paid for the freight cost. 6. Customer in Event 4 returned 54,200 worth of goods that had a cox of 52,150. 7. Collected $58,300 cash from accounts receivable 8. Paid $59.200 cash on accounts payable 9. Paid $2,600 for advertising expense 10. Paid $3,100 cash for insurance expense. 9A 9B Hw 7A TB tw Required Which of these events affect period (selling and administrative) costs? Which result in prod. uct costs? If neither, label the transaction NA Record each event in a horizontal statements model like the following one. The first event is recorded as an example Assets Liab. Equity Rev. - Exp. + Acets. Rec. + Inv. - Accts. Pay. + C. Stk. + Ret. Earn. 60,000+ NA + 60,000 + Net Inc. Cash Flow Cash NA NA + NA NA NA NA 60,000 FA LO 4-2 Exercise 4-9 Effect of product cost and period cost: Horizontal statements model Wild Rose Co experienced the following events for the 2016 accounting period: 1. Acquired S20,000 cash from the issue of common stock 2. Purchased 536,000 of inventory on account 3. Received goods purchased in Event 2 FOB shipping point. Freight cost of $900 paid in cash. 4. Returned $4,000 of goods purchased in Event 2 because of poor quality 5. Sold inventory on account that cost $28,000 for $82,000 Freight cost on the goods sold in Event 5 was $200. The goods were shipped FOB destina- tion. Cash was paid for the freight cost. 7. Collected $33,000 cash from accounts receivable 8. Paid $27.000 cash on accounts payable 9. Paid 54,500 for advertising expense 10. Paid S7,200 cash for insurance expense. Required 1. Which of these transactions affect period (selling and administrative) costs? Which result in product costs? If neither, label the transaction NA 259 Accounting for Merchandising Businesses b. Record each event in a horizontal statements model like the following one. The first event is recorded as an example Assets Liab. + Equity Rev.- Exp. = Net Inc. Cash Flow Inv. - Acts. Pay. + C.SK + Ret. Earn Cash + Accts. Res. 20,000+ NA + NA NA + 20.000 NA NA NA NA 20,000FA