MA9902C00 Lecture Notes - Oligopoly
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The following expenses were incurred by a merchandising businessduring the year. In which expense section of the income statementshould each be reported: selling, administrative, or other?
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Match each of the following accounts to the appropriate sectionor subsection of a multiple-step income statement as provided.Sections may be used once, more than once, or not at all.
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Palisade Creek Co. is a merchandising business that uses theperpetual inventory system. The account balances for Palisade CreekCo. as of May 1, 2016 (unless otherwise indicated), are asfollows:
110 | Cash | $ 83,600 |
112 | Accounts Receivable | 233,900 |
115 | Merchandise Inventory | 624,400 |
116 | Estimated Returns Inventory | 28,000 |
117 | Prepaid Insurance | 16,800 |
118 | Store Supplies | 11,400 |
123 | Store Equipment | 569,500 |
124 | Accumulated Depreciation-Store Equipment | 56,700 |
210 | Accounts Payable | 96,600 |
211 | Salaries Payable | â |
212 | Customers Refunds Payable | 50,000 |
310 | Lynn Tolley, Capital, June 1, 2015 | 685,300 |
311 | Lynn Tolley, Drawing | 135,000 |
312 | Income Summary | â |
410 | Sales | 5,069,000 |
510 | Cost of Merchandise Sold | 2,823,000 |
520 | Sales Salaries Expense | 664,800 |
521 | Advertising Expense | 281,000 |
522 | Depreciation Expense | â |
523 | Store Supplies Expense | â |
529 | Miscellaneous Selling Expense | 12,600 |
530 | Office Salaries Expense | 382,100 |
531 | Rent Expense | 83,700 |
532 | Insurance Expense | â |
539 | Miscellaneous Administrative Expense | 7,800 |
During May, the last month of the fiscal year, the followingtransactions were completed:
Record the following transactions on page 20 of the journal.Refer to the Chart of Accounts for exact wording of accounttitles.
May | 1 | Paid rent for May, $5,000. |
3 | Purchased merchandise on account from Martin Co., terms 2/10,n/30, FOB shipping point, $36,000. | |
4 | Paid freight on purchase of May 3, $600. | |
6 | Sold merchandise on account to Korman Co., terms 2/10, n/30,FOB shipping point, $68,500. The cost of the merchandise sold was$41,000. | |
7 | Received $22,300 cash from Halstad Co. on account. | |
10 | Sold merchandise for cash, $54,000. The cost of the merchandisesold was $32,000. | |
13 | Paid for merchandise purchased on May 3. | |
15 | Paid advertising expense for last half of May, $11,000. | |
16 | Received cash from sale of May 6. | |
19 | Purchased merchandise for cash, $18,700. | |
19 | Paid $33,450 to Buttons Co. on account. | |
20 | Paid Korman Co. a cash refund of $13,230 for returnedmerchandise from sale of May 6. The invoice amount of the returnedmerchandise was $13,500 and the cost of the returned merchandisewas $8,000. |
Record the following transactions on page 21 of the journal.Refer to the Chart of Accounts for exact wording of accounttitles.
May | 20 | Sold merchandise on account to Crescent Co., terms 1/10, n/30,FOB shipping point, $110,000. The cost of the merchandise sold was$70,000. |
21 | For the convenience of Crescent Co., paid freight on sale ofMay 20, $2,300. | |
21 | Received $42,900 cash from Gee Co. on account. | |
21 | Purchased merchandise on account from Osterman Co., terms 1/10,n/30, FOB destination, $88,000. | |
24 | Returned of damaged merchandise purchased on May 21, receivinga credit memo from the seller for $5,000. | |
26 | Refunded cash on sales made for cash, $7,500. The cost of themerchandise returned was $4,800. | |
28 | Paid sales salaries of $56,000 and office salaries of$29,000. | |
29 | Purchased store supplies for cash, $2,400. | |
30 | Sold merchandise on account to Turner Co., terms 2/10, n/30,FOB shipping point, $78,750. The cost of the merchandise sold was$47,000. | |
30 | Received cash from sale of May 20 plus freight paid on May21. | |
31 | Paid for purchase of May 21, less return of May 24. |