problem 4-26A Comprehensive cycle problem: Perpetual system LO4-2,
At the beginning of 2016, the Redd Company had the followingbalances in Its accounts:
cash 6.900
Inventory 15,000
Land 7,000
Common Stock 15,000
Retaind Earnings 13,900
l . purchased inventory that cost $5,200 on account from RossCompany under terms 1/10. 11/30. The merchandise was delivered FOBshipping point. Freight costs of S]90 '*ere paid incash.During 2016, the company experienced the followingevents:
2. Returned $400 of the inventory that it had purchased becausethe inventory was damaged In transit. The seller agreed to pay thereturn freight cost.
3. Paid the amount due on its account payable to Ross Companywithin the cash discount period.
4. Sold inventory that had cost $6,800 for $12, 100 on account,under terms 2/10, n/45.
5. Received merchandise returned from a customer. Themerchandise originally cost $900 and was sold to the customer for$1 ,680 cash, The customer was paid Sl ,680 cash for the returnedmerchandise.
6. Delivered goods FOB destination in Event 4. Freight costs of$140 were paid in cash.
7. Collected the amount due on the account receivable within thediscount period.
8. Sold the land for $8,500.
9. Recognized accrued interest income of $600.
10. Took a physical count indicating that $13,400 of inventorywas on hand at the end of the accounting period.
used, When an event has more than one part, use letters todistinguish the etyeets of each part. The first event is recordedas an example
b. Record the events in general journal format.
c. Open ledger T-accounts, and post the beginning balances andthe events to the accounts.
Prepare a multistep income statement, a statement of changes instockholders' equity, a bal. ance sheet, and a statement of cashflows.
e. Record and post the closing entries, and prepare apost-closing trial balance.
problem 4-26A Comprehensive cycle problem: Perpetual system LO4-2,
At the beginning of 2016, the Redd Company had the followingbalances in Its accounts:
cash 6.900
Inventory 15,000
Land 7,000
Common Stock 15,000
Retaind Earnings 13,900
l . purchased inventory that cost $5,200 on account from RossCompany under terms 1/10. 11/30. The merchandise was delivered FOBshipping point. Freight costs of S]90 '*ere paid incash.During 2016, the company experienced the followingevents:
2. Returned $400 of the inventory that it had purchased becausethe inventory was damaged In transit. The seller agreed to pay thereturn freight cost.
3. Paid the amount due on its account payable to Ross Companywithin the cash discount period.
4. Sold inventory that had cost $6,800 for $12, 100 on account,under terms 2/10, n/45.
5. Received merchandise returned from a customer. Themerchandise originally cost $900 and was sold to the customer for$1 ,680 cash, The customer was paid Sl ,680 cash for the returnedmerchandise.
6. Delivered goods FOB destination in Event 4. Freight costs of$140 were paid in cash.
7. Collected the amount due on the account receivable within thediscount period.
8. Sold the land for $8,500.
9. Recognized accrued interest income of $600.
10. Took a physical count indicating that $13,400 of inventorywas on hand at the end of the accounting period.
used, When an event has more than one part, use letters todistinguish the etyeets of each part. The first event is recordedas an example
b. Record the events in general journal format.
c. Open ledger T-accounts, and post the beginning balances andthe events to the accounts.
Prepare a multistep income statement, a statement of changes instockholders' equity, a bal. ance sheet, and a statement of cashflows.
e. Record and post the closing entries, and prepare apost-closing trial balance.
Related questions
At the beginning of 2013, the Bradley Company had the followingbalances in its accounts:
Cash $8,600
Inventory $2,600
Common Stock $8,100
Retained Earnings $3,100
| During 2014, thecompany experienced the following events: |
| 1. | Purchased inventory that cost $6,100 on account from BivinsCompany under terms 2/10, n/30. The merchandise was delivered FOBshipping point. Freight costs of $560 were paid in cash. |
| 2. | Returned $350 of the inventory that it had purchased because theinventory was damaged in transit. The seller agreed to pay thereturn freight cost. |
| 3. | Paid the amountdue on its account payable to Bivins Company within the cashdiscount period. |
| 4. | Sold inventorythat had cost $6,600 for $9,600 on account, under terms 2/10,n/45. |
| 5. | Received merchandise returned from a customer. The merchandiseoriginally cost $560 and was sold to the customer for $860 cash.The customer was paid $860 cash for the returned merchandise. |
| 6. | Delivered goodsFOB destination in Event 4. Freight costs of $660 were paid incash. |
| 7. | Collected theamount due on the account receivable within the discountperiod. |
| 8. | Took a physical count indicating that $2,300 of inventory was onhand at the end of the accounting period. Required: Record each event in a statements model like thefollowing one. In the Cash Flow column, use OA to designateoperating activity, IA for investment activity, FA for financingactivity, NC for net change in cash and NA to indicate the elementis not affected by the event. The first event is recorded as anexample. |
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. |
