Presented below are transactions related to R. Humphrey Company
- On December 3, R. Humphrey Company sold $570,000 of merchandise to Frazier Co., terms 1/10, n/30, FOB destination. R Humphrey paid $400 for freight charges. The cost of the merchandise sold was $350,000.
- On December 8, Frazier Co. was granted an allowance of $20,000 for merchandise purchased on December 3.
- On december 13, R. Humphrey Company received the balance due from Frazier Co.
Instructions
- Prepare the journal entries to record these transactions on the books of R. Humphrey Company using a perpetual inventory system.
- Assume that R. Humphrey Company received the balance due from Frazier Co. on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2.
On June 10, Diaz Company purchased $8,000 of merchandise from Taylor Company, FOB shipping point, terms 2/10, n/30. Diaz pays the freight costs of $400 on June 11. Damaged goods totaling $300 are returned to Taylor for credit on June 12. The fair value of these goods is $70. On June 19, Diaz pays Taylor Company in full, less the purchased discount. Both companies use a perpetual inventory system.
Instructions
- Prepare separate entries for each transaction on the books of Diaz Company.
- Prepare separate entries for each transaction for Taylor Company. The merchandise purchased by Diaz on June 10 had cost Taylor $4,800.
The adjusted trial balance of Sang Company shows the following data pertaining to sales at the end of its fiscal year October 31, 2019; Sales Revenue $820,000, Freight-Out $16,000, Sales Returns and Allowances $25,000, and Sales discounts $13,000.
Instructions
- Prepare the sales section of the income statement.
- Prepare separate closing entris for (1) sales revenue, and (2) the contra accounts to sales revenue.
Tim Jarosz Company had the following account balances at year-end; Cost of Goods Sold $60,000, Inventory $15,000, Operating Expenses $29,000, Sales Revenue $115,000, Sales Discounts $1,200, and Sales Returns and Allowances $1,700. A physical count of inventory determines that merchandise inventory on hand is $13,600.
Instructions
- Prepare the adjusting entry necessary as a result of the physical count.
- Prepare closing entries
Presented below is information related to Hoerl Co. for the month of January 2020.
Instructions
- Prepare the necessary adjusting entry for inventory.
- Prepare the necessary closing entries.
Presented below is information for Kaila Company for the month of March 2019.
Instructions
- Prepare a multiple-step income statement
- Compute the gross profit rate.
In its income statement for the year ended December 31, 2019. Anhad Company reported the following condensed data.
| Operating expenses | $725,000 | Interest revenue | $28,000 |
| Cost of goods sold | 1,289,000 | Loss on disposal of plant assets | 17,000 |
| Interest expense | 70,000 | Net sales | 2,200,000 |
Instructions
- Prepare a multiple-step income statement.
- Prepare a single-step income statement.
An inexperienced accountant for Stahr Company made the following errors in recording merchandising transactions.
- A $210 refund to a customer for faulty merchandise was debited to Sales revenue $210 and credited to Cash $210.
- A $180 credit purchase of supplies was debited to inventory $180 and credited to Cash $180.
- A $215 sales discount was debited to Sales Revenue
- A cash payment of $20 for freight on merchandise purchase was debited to Freight-out $200 and credited to Cash $200
Instructions
Prepare separate correcting entries for each error, assuming that the incorrect entry is not reversed. (Omit explanations.)
In 2019, Laquen Company had net sales of $900,000 and cost of goods sold of $522,000. Operating expenses were $225,000, and interest expense was $11,000. Laquen prepares a multiple-step income statement.
Instructions
- Compute Laquen's gross profit.
- Compute the gross profit rate. Why is this rate computed by financial statement users?.
- What is Laquen's income from operations and net income?
- If Laquen prepared a single-step income statement, what amount would it report for et income?
- In what section of its classified balance sheet should Laqen report inventory?
Presented below is financial information for two different companies.
Instructions
- Determine the missing amounts.
- Determine the gross profit rates. (Round to one decimal place.)