Problem 1

The following transactions took place for Joes TV Shop for the month of April 2018. Joes TV shop uses the perpetual inventory system.

Step 1: Record the following transactions in journal entry format.

1. April 3 - Purchased televisions from Samsung on account at a total cost of $650,000, terms 2/10, n/30. The televisions were shipped FOB shipping point, and the freight cost was $1,000, which was paid in cash.

2. April 5 - Sold televisions costing $250,000 for $390,000 to ABC Company on account.

3. April 7 - ABC Company returned 10 televisions that were damaged. The televisions had cost Joes TV shop $5,000 and were sold for $7,750. Joes TV Shop issued a credit to ABC Company.

4. April 8 - Purchased additional televisions from Samsung on account at a total cost of $30,000, terms 1/10, n/30. The televisions were shipped FOB destination, and the freight cost was $500, which was paid in cash.

5. April 9 - Returned televisions to Samsung because they were damaged (from April 3 purchase). Received a credit of $15,000 from Samsung.

6. April 11 - Paid the amount owed to Samsung from the April 3 transaction.

7. April 16 - Received payment from ABC Company.

8. April 22 - Sold televisions costing $125,000 for $225,000 to Jims Sports Bar & Grille on account.

9. April 23 - Paid the amount owed to Samsung from the April 8 transaction.

10. April 25 - Received payment from Jims Sports Bar & Grille.

11. April 26 - Recorded cash salaries of $150,000 for the month of April.

12. April 27 - Incurred the following operating expenses for the month of April: $25,000 advertising, $15,000 rent, $13,000 utilities, $5,000 repairs and maintenance, and $5,000 business insurance.

13. April 28 - Recorded accrued interest expense for a loan of $6,000.

Step 2: Prepare an income statement for Joes TV Shop for the month of April.

Problem 2

Cindys Appliance Store uses a perpetual inventory system, and ending inventory at April 30 was $25,000. Following is a listing of transactions for Cindys for the month of May. Cindys purchased refrigerators from GE on account at a total cost of $500,000 with terms 2/10, n/30. Cindys also paid freight of $800 on the refrigerators purchased from GE. Several of the refrigerators had to be returned to GE, and GE issued a credit to Cindys for 10 refrigerators that cost $10,000. Cindys then paid the amount due to GE within 7 days of the invoice date. Lastly, Cindys sold refrigerators on account that had cost $250,000 for $375,000 to Marcs Pizza Palace.

Required: Answer the following questions for Cindys Appliance Store.

1. What is the balance in Cindys inventory account at the end of May?

2. What is Cindys gross margin for the month of May?

Problem 3

Computer Pro Inc. (CPI) began the month of September with 20 computers; each unit cost $45. Following are a listing of transactions that took place in the month of September for CPI:

September 3 Purchased 40 computers at $50 each

September 11 Sold 52 computers at $90 each

September 17 Purchased 40 computers at $55 each

September 23 Sold 35 computers at $90 each

Required: Calculate COGS, ending inventory, and gross margin for CPI under the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3) weighted average.

Problem 4

On May 31, Shark Company had a cash balance in its general ledger of $6,675. The companys bank statement from National bank showed a balance of $8,240 on May 31. The following items have come to your attention:

1. Sharks May 31 deposit of $1,005 was not included on the bank statement.
2. The banks maintenance service charge for the month was $100.
3. The bank collected a note receivable of $1,500 for Shark, along with an additional $58 for interest. The bank deducted a $30 fee for this service. Shark had not accrued any interest on the note.
4. Sharks bookkeeper erroneously recorded a payment to William Company for $192 as $129. The purchase was for printing expenses. The check cleared the bank for the correct amount of $192.
5. The bank erroneously recorded a deposit for Shark of $520 as $250.
6. Shark had the following checks outstanding at May 31: Ck #102 for $1,000; Ck #110 for $500; and Ck #115 for $275.
7. The bank returned a check from a customer as NSF in the amount of $300.

Step 1: Prepare a bank reconciliation for Shark Company as of May 31.

Step 2: Prepare any necessary journal entries as a result of the May 31 bank reconciliation.