ACC 100 Lecture Notes - Lecture 5: Gross Margin, Perpetual Inventory, Gross Profit
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On November 1, 2012 the following were the account balances ofSolo Sales and Service, Inc. The perpetual inventory method isused.
Debits | Credits | |||
Cash | $4,795 | Accumulated depreciation | $1,000 | |
Accounts Receivable | 2,320 | Accounts Payable | 6,800 | |
Supplies | 1,000 | Unearned Service Revenue | 400 | |
Equipment | 40,000 | Salaries Payable | 550 | |
Common Stock | 11,000 | |||
Retained Earnings | 28,365 | |||
$48,115 | $48,115 |
During November the followingsummary transactions were completed.
Nov. 8 | Paid $1,150 for salaries due employees, of which $550 is forOctober salaries payable and $600 is for November. |
10 | Received $1,400 cash from customers in payment of account. |
11 | Purchased merchandise on account from Midwest Wholesale Supplyfor $6,000, terms 2/10, n/30. |
12 | Sold merchandise on account for $4,500, terms 2/10, n/30. Thecost of the merchandise sold was $3,000. |
15 | Received credit from Midwest Wholesale Supply for merchandisereturned $200. |
19 | Received collections in full, less discounts, from customersbilled on sales of $4,500 on November 12. |
20 | Paid Midwest Wholesale Supply in full, less discount. (Donâtforget the return on the 15th.) |
22 | Received $1,300 cash for services performed in November. |
25 | Purchased equipment on account $3,000. |
27 | Purchased supplies on account $1,300. |
28 | Paid creditors $2,500 of accounts payable due. |
29 | Paid November rent $300. |
29 | Paid salaries $1,100. |
29 | Performed services on account and billed customers for servicesprovided $1,900. |
29 | Received $550 from customers for services to be provided in thefuture. |
Adjustment data:
1. | Supplies on hand are valued at $1,600. |
2. | Accrued salaries payable as of 11/30 are $500. |
3. | Depreciation for the month is $750. |
4. | $650 of the unearned service revenue has not been earned bymonth end. |
Instructions
Enter the November 1 balances in ledger accounts. Use T accountsprovided on the next page.
Cash | |
| |
|
Accounts Receivable | |
Supplies | |
Store Equipment | |
Accumulated Depreciationâ Store Equipment | |
Accounts Payable | |
Unearned Service Revenue | |
Salaries Payable | |
Common Stock | |
Retained Earnings | |
General Ledger (Continued)
Income Summary | |
On November 1, 2012 the following were the account balances ofSolo Sales and Service, Inc. The perpetual inventory method isused.
Debits | Credits | |||
Cash | $4,795 | Accumulated depreciation | $1,000 | |
Accounts Receivable | 2,320 | Accounts Payable | 6,800 | |
Supplies | 1,000 | Unearned Service Revenue | 400 | |
Equipment | 40,000 | Salaries Payable | 550 | |
Common Stock | 11,000 | |||
Retained Earnings | 28,365 | |||
$48,115 | $48,115 |
During November the followingsummary transactions were completed.
Nov. 8 | Paid $1,150 for salaries due employees, of which $550 is forOctober salaries payable and $600 is for November. |
10 | Received $1,400 cash from customers in payment of account. |
11 | Purchased merchandise on account from Midwest Wholesale Supplyfor $6,000, terms 2/10, n/30. |
12 | Sold merchandise on account for $4,500, terms 2/10, n/30. Thecost of the merchandise sold was $3,000. |
15 | Received credit from Midwest Wholesale Supply for merchandisereturned $200. |
19 | Received collections in full, less discounts, from customersbilled on sales of $4,500 on November 12. |
20 | Paid Midwest Wholesale Supply in full, less discount. (Donâtforget the return on the 15th.) |
22 | Received $1,300 cash for services performed in November. |
25 | Purchased equipment on account $3,000. |
27 | Purchased supplies on account $1,300. |
28 | Paid creditors $2,500 of accounts payable due. |
29 | Paid November rent $300. |
29 | Paid salaries $1,100. |
29 | Performed services on account and billed customers for servicesprovided $1,900. |
29 | Received $550 from customers for services to be provided in thefuture. |
Adjustment data:
1. | Supplies on hand are valued at $1,600. |
2. | Accrued salaries payable as of 11/30 are $500. |
3. | Depreciation for the month is $750. |
4. | $650 of the unearned service revenue has not been earned bymonth end. |
Instructions
Print out the solution pages for thegeneral ledger, journal and worksheet that follow and enter thefollowing transactions (might be a good idea to use pencil): Enter the November 1 balances in ledger accounts. Use T accountsprovided on the next page. Enter the November transactions (not adjusting entries untilrequirement âeâ) in the general journal provided on the nextpage. Post to the ledger accounts. You will need to add someaccounts. Prepare an unadjusted trial balance at November 30 and enter onthe worksheet. Then complete the other worksheet columns. (Seebelow.) Worksheetrequirement: Using your unadjusted trial balance fromabove instructions and the data for adjusting entries, prepare a 10column worksheet similar to the one in the chapter 4 appendix ofyour text. Journalize and post adjusting entries. Prepare a multi-step income statement and aretained earnings statement for November and aclassified balance sheet at November 30. Use yourown paper. (No formatted sheets are supplied as we did for theother items.) These statements must be properlytitled/formatted. Journalize and post closing entries. |
Practical Completion Point 1
Minnie Armim runs a business Min Armim Wasteage that specialises in energy saving products and advice. She has contacted you for some assistance in setting up a new accounting system. Minnie has managed to collect enough information to create a chart of accounts for you to work from.
This completion point comprises two tasks. Setting up a new system by completing an opening entry and any other relevant journal entries then posting these appropriately; and entering a set of transactions into the general journal and then recording these in the relevant ledgers. After completing these task you will need to review your work and submit.
Task 1
You have been provided with an Excel File which contains the General Journal and Ledger Accounts. The necessary accounts as well as blank accounts to be used if needed have been included. You will need to complete this task by entering the relevant information into the excel spreadsheet provided.
Enter the information below from the chart of accounts and schedules in order to set up Richardâs new system as an Opening Entry into General Journal and post the relevant information to the General Ledger Accounts provided in the excel file.
Min Armim Wasteage - Chart of Accounts as at 1 July 2017 | ||
103 | Petty Cash | 250.00 |
105 | Bank | 3,860.00 |
107 | Accounts Receivable Control | 15,038.00 |
109 | Allowance for Bad and Doubtful Debts | 462.00 |
111 | Inventory on Hand | 8,208.00 |
113 | Stationery on Hand | 130.00 |
115 | Prepaid Insurance | 1,800.00 |
116 | Prepaid Rent | 10,000.00 |
140 | Premises | 140,000.00 |
150 | Vehicle | 23,000.00 |
151 | Acc. Depreciation âVehicle | 229.00 |
160 | Equipment | 6,400.00 |
161 | Accumulated Depreciation â Equip | 1,460.00 |
199 | GST Receivable | 1,000.00 |
207 | Accounts Payable Control | 5,687.00 |
205 | Wages Expense Payable | 862.00 |
210 | Accrued Telephone Expense | 481.00 |
220 | Office Supplies Owing | 186.00 |
299 | GST Payable | 1,950.00 |
250 | Big 4 Bank Mortgage Loan (5-year) | 123,000.00 |
303 | Capital â Minnie Armim | 75,369.00 |
Additional Notes
Schedule of Accounts Receivable
as at 1 July 2017
Acc. No.
10701 Unplugged Limited 660
10703 Vin Walker 1,795
10705 The Charity Stores 480
10707 Developing Naturally 6,111
10709 Dental Services SA 2,552
10711 Hotels United 3,440
15,038
Schedule of Accounts Payable
as at 1 July 2017
20701 Get Connected Limited 4,250
20703 Reduce, Reuse, Get Rich 568
20705 Flooded Industries 869
5,687
You will need to enter this information into the appropriate subsidiary ledger accounts.
Task 2
Using the excel file you have already been working on, enter the transactions below into the General Journal and then update the Ledger accounts as required.
Transactions
July 1 Sold 40 Energy Saving light globes on credit to Unplugged Ltd for $440 (including GST).
July 2 Received a cheque for $575 from Vin Walker as part payment of their account.
July 5 Issued Cheque number 718 to Flooded Industries. The cheque amount was $782.10 and a discount of $86.9 (including GST of $7.90) was received for early payment.
July 8 Purchased 200 metres of premium low voltage cabling from Get Connected for $4 per metre, plus a total freight charge of $50 and total GST of $85.
July 12 Received $450 cash (net of GST) from Ms Elvia Marks for a full house inspection and energy usage report.
July 13 Purchased 1000 Energy Saving light globes for $3 each from Get Connected Ltd. The delivery charge was $100. All amounts are net of GST. Their invoice No: 726.
July 15 Cash Sale of 12 Energy Saving light globes to Ms Christa Heathers for $10 each (net of GST)