Accounting 115
Assignment 5
Summer 2006
Merchandising Operations
Print Name ______Student Number ______
(1)
This exercise stresses the relationships between the information recorded in a periodic inventory system and the basic elements of an income statement. Each of the five lines represents a separate set of information. You are to fill in the missing amounts. A net loss in the right-hand column is to be indicated by placing brackets around the amount, as for example, in line e <20,000>.
Begin- Net Cost of Net
Net ning Pur- Ending Goods Gross Income
Sales Inventory chases Inventory Sold Profit Expenses or (Loss)
- 345,000 70,000 100,000 40,000 A 215,000 95,000 B
- 610,000 100,000 275,000 C 280,000 D E 15,000
- 567,000 300,000 F 185,500 420,000 147,000 150,500 G
- 800,000 H 435,000 160,000 I 140,500 75,000 J
- K 166,000 L 145,000 375,000 205,000 M <15,000>
A ______H ______
B ______I ______
C ______J ______
D ______K ______
E ______L ______
F ______M ______
G ______
(2)
Bob the Builder, Inc. uses a perpetual inventory system. A partial chart of accounts is shown below, followed by a series of merchandising transactions. Indicate the accounts that should be debited and credited in recording each transaction.
1 / Cash / 50 / Sales2 / Accounts Receivable / 60 / Cost of Goods Sold
5 / Inventory / 99 / Income Summary
30 / Accounts Payable
40 / Retained Earnings
Account(s) / Account(s)
Transactions / Debited / Credited
Example: Sold merchandise for cash / 1,60 / 50,5
A / Purchased merchandise on account
B / Sold merchandise on account
C / Paid the supplier of the merchandise in transaction A
D / Collected cash from the customer in transaction B
E / Made an entry to close the revenue account
F / Made an entry at year-end to close the Cost of Goods Sold account
G / Closed the Income Summary account at the end of an unprofitable year