CH 5 - Homework

Ch 5: Homework
BE5.11 (LO 7) Assume that Kowloon Electronics uses a periodic inventory system
and has these account balances (in thousands): Purchases ₩430,000; Purchase
Returns and Allowances ₩13,000; Purchase Discounts ₩8,000; and Freight-In
W16,000. Determine net purchases and cost of goods purchased. (8 points)
Purchases ....................................................................... ₩430,000

Less: Purchase returns and allowances .................... ₩13,000
Purchase discounts ........................................... 8,000 21,000
Net purchases ................................................................ ₩409,000
Net purchases ................................................................ ₩409,000

Add: Freight-in............................................................... 16,000
Cost of goods purchased .............................................. ₩425,000
BE5.12 (LO 7) Assume the same information as in BE5.11 and also that Kowloon
Electronics has beginning inventory (in thousands) of ₩60,000, ending inventory
of ₩86,000, and net sales of ₩680,000. Determine the amounts to be reported for
cost of goods sold and gross profit. (8 points)
Net sales ......................................................................... ₩680,000

Beginning inventory ...................................................... ₩60,000
Add: Cost of goods purchased* .................................. 425,000
Cost of goods available for sale ................................... 485,000
Less: Ending inventory ................................................. 86,000
Cost of goods sold ......................................................... 399,000
Gross profit ..................................................................... W281,000
E5.4 (LO 2, 3) On June 10, York Gifts purchased £7,600 of merchandise from
Bianchi Designs, FOB shipping point, terms 2/10, n/30. York pays the freight costs
of £400 on June 11. Damaged goods totaling £300 are returned to Bianchi for credit
on June 12. The net realizable value of these goods is £70. On June 19, York pays
Bianchi in full, less the purchase discount. Both companies use a perpetual
inventory system.
Instructions
a. Prepare separate entries for each transaction on the books of York. (16 points)
June 10 Inventory .................................................. 7,600
Accounts Payable ............................ 7,600
11 Inventory .................................................. 400

Cash .................................................. 400
12 Accounts Payable ................................... 300

Inventory ........................................... 300
19 Accounts Payable (£7,600 – £300) ......... 7,300

Inventory (£7,300 X 2%) ................................ 146
Cash (£7,300 – £146) ........................ 7,154
b. Prepare separate entries for each transaction for Bianchi. The merchandise
purchased by York on June 10 had cost Bianchi £4,300. (20 points)
June 10 Accounts Receivable .............................. 7,600

Sales Revenue ................................. 7,600
Cost of Goods Sold ................................ 4,300
Inventory .......................................... 4,300
12 Sales Returns and Allowances .............. 300

Accounts Receivable ...................... 300
Inventory .................................................. 70
Cost of Goods Sold......................... 70
19 Cash (£7,300 – £146) ............................... 7,154

Sales Discounts (£7,300 X 2%) .............. 146
Accounts Receivable (£7,600 – £300) ............................. 7,300
E5.14 (LO 5) Financial information is presented below for three different companies.
Athena Cosmetics Harry Grocery Panama Wholesalers
Sales revenue €90,000 € (e) €122,000
Sales returns and allowances (a) 5,000 12,000
Net sales 86,000 95,000 (i)
Cost of goods sold 56,000 (f) ( j)
Gross profit (b) 22,000 24,000
Operating expenses 15,000 (g) 18,000
Income from operations (c) (h) (k)
Other income and expense (4,000) (3,000) (l)
Net income (c) 11,000 5,000
Instructions
Determine the missing amounts. (@2x12=24 points)
A = (4,000)
B = 30,000
C = 15,000
D = 11,000
E = 100,000
F = 73,000
G = (8,000)
H = 14,000
I = 110,000
J = 86,000
K = 6,000
l = 1,000
E5.20 (LO 7) This information relates to Olaf Decor.

1. On April 5, purchased merchandise on account from DeVito Group for €18,000,
terms 2/10, net/30, FOB shipping point.
2. On April 6, paid freight costs of €820 on merchandise purchased from DeVito.
3. On April 7, purchased equipment on account for €30,000.
4. On April 8, returned some of April 5 merchandise, which cost €2,800, to DeVito.
5. On April 15, paid the amount due to DeVito in full.
Instructions
a. Prepare the journal entries to record these transactions on the books of Olaf
using a periodic inventory system. (20 points)
1. April 5 Purchases ........................................ 18,000
Accounts Payable ..................... 18,000
2. April 6 Freight-In.......................................... 820

Cash ............................................ 820
3. April 7 Equipment........................................ 30,000
Accounts Payable ..................... 30,000
4. April 8 Accounts Payable ........................... 2,800

Purchase Returns and Allowances ............................. 2,800
5. April 15 Accounts Payable (€18,000 – €2,800) ........................ 15,200

Purchase Discounts [(€18,000 – €2,800) X 2%)] ..... 304
Cash (€15,200 – €304) ............... 14,896
b. Assume that Olaf paid the balance due to DeVito on May 4 instead of April 15.
Prepare the journal entry to record this payment. (4 points)
May 4 Accounts Payable (€18,000 – €2,800)........................ 15,200

Cash 15,200

CH 5 - Homework

Uploaded by

Copyright:

Available Formats

CH 5 - Homework

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

CH 5 - Homework

Uploaded by

Copyright:

Available Formats

Ch 5: Homework

Purchases ....................................................................... ₩430,000

Net purchases ................................................................ ₩409,000

Net sales ......................................................................... ₩680,000

11 Inventory .................................................. 400

12 Accounts Payable ................................... 300

19 Accounts Payable (£7,600 – £300) ......... 7,300

June 10 Accounts Receivable .............................. 7,600

12 Sales Returns and Allowances .............. 300

19 Cash (£7,300 – £146) ............................... 7,154

E5.20 (LO 7) This information relates to Olaf Decor.

2. April 6 Freight-In.......................................... 820

4. April 8 Accounts Payable ........................... 2,800

5. April 15 Accounts Payable (€18,000 – €2,800) ........................ 15,200

May 4 Accounts Payable (€18,000 – €2,800)........................ 15,200

You might also like