Question 1) Journalizing purchase and sale transactions Sep10 Cash $4,455
Journalize the following transactions that occurred in September 2015 for Aquamarines.
No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Sep. 3 Purchased merchandise inventory on account from Shallin Wholesalers, $5,000.
Terms 1/15, n/EOM, FOB shipping point.
4 Paid freight bill of $80 on September 3 purchase.
4 Purchased merchandise inventory for cash of $1,700.
6 Returned $500 of inventory from September 3 purchase.
8 Sold merchandise inventory to Hermosa Company, $6,000, on account. Terms 2/15, n/35. Cost of goods, $2,640.
9 Purchased merchandise inventory on account from Thomas Wholesalers, $8,000. Terms 2/10,n/30, FOB destination.
10 Made payment to Shallin Wholesalers for goods purchased on September 3, less return and discount.
12 Received payment from Hermosa Company, less discount.
13 After negotiations, received a $200 allowance from Thomas Wholesalers.
15 Sold merchandise inventory to Jordan Company, $2,500, on account. Terms 1/10, n/EOM. Cost of goods, $1,050.
22 Made payment, less allowance, to Thomas Wholesalers for goods purchased on September.
23 Jordan Company returned $400 of the merchandise sold on September 15.Cost of goods, $160.
25 Sold merchandise inventory to Smithsons for $1,100 on account that cost $400. Terms of 2/10, n/30 were offered, FOB shipping point.
As a courtesy to Smithsons, $75 of freight was added to the invoice for which cash was paid by Aquamarines.
26 After negotiations, granted a $100 allowance to Smithsons for merchandise on September 25.
29 Received payment from Smithsons, less allowance and discount.
30 Received payment from Jordan company, less return.
Question 2) Preparing a single-step income statement, preparing a multi-step income statement, and computing the gross profit percentage
Operating income $71,900
The records of Grade A Steak Company list the following selected accounts for the quarter ended April 30, 2015:
| Interest Revenue |
$800 |
|
Accounts Payable |
|
|
$17,000 |
| Merchandise Inventory |
45,100 |
|
Accounts Receivable |
|
|
33,500 |
| Notes Payable, long-term |
47,000 |
|
Accumulated Depreciation-Equipment |
|
37,600 |
| Salaries Payable |
2,400 |
|
Angus, Capital, Jan. 31 |
|
|
53,300 |
| Sales Discounts |
2,000 |
|
Angus, Withdrawals |
|
|
20,000 |
| Sales Returns and Allowances |
7,500 |
|
Cash |
|
|
|
7,600 |
| Sales Revenue |
296,100 |
|
Cost of Goods Sold |
|
|
162,100 |
| Rent Expense (Selling) |
21,780 |
|
Equipment |
|
|
130,600 |
| Office Supplies |
5,700 |
|
Interest Payable |
|
|
1,200 |
| Unearned Revenue |
13,300 |
|
Rent Expense (Administrative) |
|
9,780 |
| Interest Expense |
2,000 |
|
Utilities Expense (Selling) |
|
|
10,890 |
| Depreciation Expense-Equipment (Administrative) |
1,630 |
|
Delivery Expense (Selling) |
|
|
3,630 |
| Utilities Expense (Administrative) |
4,890 |
|
|
|
|
|
|
Requirements
1. Prepare a single-step income statement.
2. Prepare a multi-step income statement.
3. M. Davidson, manager of the company, strives to earn a gross profit percentage of at least 50%. Did Grade A achieve this goal? Show your calculations.
Quesiton 3) Accounting for inventory using the perpetual inventory system-FIFO, LIFO, and Weighted-Average
Fit World began January with merchandise inventory of 80 crates of vitamins that cost a total of $4,000. During the month, Fit world purchased and sold merchandise on account as follows:
| Jan. |
5 |
Purchase |
140 crates @ $ 55 each |
|
13 |
Sale |
|
160 crates @ $100 each |
|
18 |
Purchase |
160 crates @ $ 60 each |
|
26 |
Sale |
|
170 crates @ $110 each |
Requirements
1. Prepare a perpetual inventory record, using the FIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit.
2. Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit.
3. Prepare a perpetual inventory record, using the weighted-average inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit.(Round weighted average cost per unit to the nearest cent and all other amounts to the nearest dollar)
4. If the business wanted to pay the least amount of income taxes possible, which method would it choose?