Acc557 Financial Accounting: Week 4 Chapter 5 (E5-4, E5-8, E5-13, P5-3A)

Acc557 Financial Accounting Week 4 Chapter 5 (E5-4, E5-8, E5-13, P5-3A) Exercise 5-4 On June 10, Rebecca Company purchased $7,600 of merchandise from Clinton Company, FOB shipping point, terms 2/10, n/30. Rebecca pays the freight costs of $400 on June 11. Damaged goods totaling $300 are returned toClintonfor credit on June 12. The fair value of these goods is $70. On June 19, Rebecca pays Clinton Company in full, less the purchase discount. Both companies use a perpetual inventory system. Instructions: (a) Prepare separate entries for each transaction on the books of Rebecca Company. (Record journal entries in the order in which they must have occurred. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (b) Prepare separate entries for each transaction for Clinton Company. The merchandise purchased by Rebecca on June 10 had costClinton$4,300. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Exercise 5-8 Presented below is information related to Taylor Co. for the month of January 2014. Ending inventory per perpetual records 21,600 Insurance expense 12,000 Ending inventory actually on hand 21,000 Rent expense 20,000 Cost of goods sold 208,000 Salaries and wages expense 59,000 Freight-out 7,000 Sales discounts 8,000 Sales returns and allowances 13,000 Sales revenue 378,000 Instructions: (a) Prepare the necessary adjusting entry for inventory. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (b) Prepare the necessary closing entries. Exercise 5-13 Presented below is financial information for two different companies. Lee Company Chan Company Sales 90,000 (d) Sales return (a) 5,000 Net sales 81,000 95,000 Cost of goods sold 56,000 (e) Gross profit (b) 41,500 Operating expense 15,000 (f) Net income (c ) 15,000 *(a) Determine the missing amounts. *(b) Determine the gross profit rates. (Round answer to 1 decimal place, e.g. 25.2%.) P5-3A Starz Department Store is located near the Towne Shopping Mall. At the end of the company’s calendar year on December 31, 2014, the following accounts appeared in two of its trial balances. Unadjusted Adjusted Unadjusted Adjusted Accounts payable 79,300 80,300 Interest Revenue 4,000 4,000 Accounts receivable 50,300 50,300 Inventory 75,000 75,000 Accumulated Depr – Buildings 42,100 52,500 Mortgage Payable 80,000 80,000 Accumulated Depr – Equipment 29,600 42,900 Prepaid insurance 9,600 2,400 Buildings 290,000 290,000 Property tax expense 4,800 Cash 23,800 23,800 Property tax payable 4,800 Common stock 112,000 112,000 Retained earnings 64,600 64,600 Cost of goods sold 412,700 412,700 Salaries and Wages expense 108,000 108,000 Depreciation expense 23,700 Sales commissions expense 10,200 14,500 Dividends 24,000 24,000 Sales commissions payable 4,300 Equipment 110,000 110,000 Sales returns and allowances 8,000 8,000 Insurance expense 7,200 Sales revenue 724,000 724,000 Interest expense 3,000 8,600 Utilities expense 11,000 12,000 Interest payable 5,600 Instructions: (a) Prepare a multiple-step income statement (List other revenues before other expenses.), a retained earnings statement (List items that will increase retained earnings first.), and a classified balance sheet. $16,000 of the mortgage payable is due for payment next year. (List current assets in order of liquidity. Property, plant and equipment list in order of land, buildings and equipment.) (b) Journalize the adjusting entries that were made. (c) Journalize the closing entries that are necessary.