Connect 2-Semester Access Card for Fundamental Accounting Principles
Connect 2-Semester Access Card for Fundamental Accounting Principles
22nd Edition
ISBN: 9780077632755
Author: John Wild
Publisher: McGraw-Hill Education
bartleby

Videos

Question
Book Icon
Chapter 18, Problem 9E
Requirement 1

To determine

To prepare:

Income statement for −

  • Garcon Company
  • Pepper Company
  • Requirement 1

    Expert Solution
    Check Mark

    Answer to Problem 9E

    Solution:

  • Income statement for Garcon Company −
    • Garcon Company
      Income Statement
      For the Year Ended December 31, 2015
      Sales195,030
      Less: Cost of Goods sold

      91,030
      Gross profit

      104,000
      Less: Selling and Administrative Expenses


      General and administrative expenses
      21,000

      Selling expenses
      50,000




      Total selling and administrative expenses

      71,000



      Operating Income33,000

    Explanation of Solution

    Explanation The income statement for Garcon Company has been prepared using the information given.

  • Sales = $ 195,030
  • Gross profit
  • The information given to calculated gross profit is −
  • Sales = $ 195,030
  • Cost of Goods sold = $ 91,030

  •   Gross profit = Sales  Cost of Goods SoldGross profit = $ 195,030  $ 91,030Gross profit = $ 104,000

  • Total selling expenses −
  • The information given to calculate total selling and administrative expenses is −
  • General and administrative expenses = $ 21,000
  • Selling expenses = $ 50,000

  •   Total selling and administrative expenses = General and administrative expenses+Selling expensesTotal selling and administrative expenses = $ 21,000 + $ 50,000Total selling and administrative expenses = $ 71,000

  • Operating Income −
  • The information given to calculate operating income is −
  • Gross profit = $ 104,000
  • Total selling and administrative expenses = $ 71,000

  •   Operating Income = Gross profit  Total selling and administrative expensesOperating Income = $ 104,000  $ 71,000Operating Income = $ 33,000

    The income statement of Garcon Company has been prepared.

  • Income statement for Pepper Company −
    • Pepper Company
      Income Statement
      For the Year Ended December 31, 2015
      Sales290,010
      Less: Cost of Goods sold

      143,010
      Gross profit

      147,000
      Less: Selling and Administrative Expenses


      General and administrative expenses
      43,000

      Selling expenses
      46,000




      Total selling and administrative expenses

      89,000



      Operating Income58,000

    Explanation:

    The income statement for Garcon Company has been prepared using the information given.

  • Sales = $ 290,010
  • Gross profit
  • The information given to calculated gross profit is −
  • Sales = $ 290,010
  • Cost of Goods sold = $ 143,010

  •   Gross profit = Sales  Cost of Goods SoldGross profit = $ 290,010  $ 143,010Gross profit = $ 147,000

  • Total selling expenses −
  • The information given to calculate total selling and administrative expenses is −
  • General and administrative expenses = $ 43,000
  • Selling expenses = $ 46,000

  •   Total selling and administrative expenses = General and administrative expenses+Selling expensesTotal selling and administrative expenses = $ 43,000 + $ 46,000Total selling and administrative expenses = $ 89,000

  • Operating Income −
  • The information given to calculate operating income is −
  • Gross profit = $ 147,000
  • Total selling and administrative expenses = $ 899,000

  •   Operating Income = Gross profit  Total selling and administrative expensesOperating Income = $ 147,000  $ 89,000Operating Income = $ 58,000

    The income statement of Pepper Company has been prepared.

    Conclusion

    Thus, the income statements for Garcon Company and Pepper Company have been prepared.

    Requirement 2

    To determine

    To prepare:

    Current assets section for −

  • Garcon Company
  • Pepper Company
  • Requirement 2

    Expert Solution
    Check Mark

    Answer to Problem 9E

    Solution:

  • The current asset section for Garcon Company −
    • Garcon Company
      Balance sheet
      For the Year Ended December 31, 2015
      Current Assets

      Cash

      20,000
      Accounts Receivables, net

      13,200
      Inventory


      Raw material − Ending
      5,300

      Work in process − Ending
      22,000

      Finished gods − Ending
      17,650



      44,950



      Total current assets78,150

    Explanation of Solution

    The current assets section includes all the current assets of the company. The current assets given in the information are −

  • Cash = $ 20,000
  • Accounts Receivables, net = $ 13,200
  • Raw material − Ending = $ 5,300
  • Work in process − Ending = $ 22,000
  • Finished gods − Ending = $ 17,650
  • Using the above information, the current assets section for Garcon Company has been prepared.

  • The current asset section for Pepper Company −
    • Pepper Company
      Balance sheet
      For the Year Ended December 31, 2015
      Current Assets

      Cash

      15,700
      Accounts Receivables, net

      19,450
      Inventory


      Raw material − Ending
      7,200

      Work in process − Ending
      16,000

      Finished gods − Ending
      13,300



      36,500



      Total current assets71,650

    Explanation:

    The current assets section includes all the current assets of the company. The current assets given in the information are −

  • Cash = $ 15,700
  • Accounts Receivables, net = $ 19,450
  • Raw material − Ending = $ 7,200
  • Work in process − Ending = $ 16,000
  • Finished gods − Ending = $ 13,300
  • Using the above information, the current assets section for Pepper Company has been prepared.

    Conclusion

    Thus, the current assets section for both the companies have been prepared.

    Want to see more full solutions like this?

    Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

    Chapter 18 Solutions

    Connect 2-Semester Access Card for Fundamental Accounting Principles

    Knowledge Booster
    Background pattern image
    Accounting
    Learn more about
    Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
    Recommended textbooks for you
    Text book image
    FINANCIAL ACCOUNTING
    Accounting
    ISBN:9781259964947
    Author:Libby
    Publisher:MCG
    Text book image
    Accounting
    Accounting
    ISBN:9781337272094
    Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
    Publisher:Cengage Learning,
    Text book image
    Accounting Information Systems
    Accounting
    ISBN:9781337619202
    Author:Hall, James A.
    Publisher:Cengage Learning,
    Text book image
    Horngren's Cost Accounting: A Managerial Emphasis...
    Accounting
    ISBN:9780134475585
    Author:Srikant M. Datar, Madhav V. Rajan
    Publisher:PEARSON
    Text book image
    Intermediate Accounting
    Accounting
    ISBN:9781259722660
    Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
    Publisher:McGraw-Hill Education
    Text book image
    Financial and Managerial Accounting
    Accounting
    ISBN:9781259726705
    Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
    Publisher:McGraw-Hill Education
    ACCOUNTING BASICS: Debits and Credits Explained; Author: Accounting Stuff;https://www.youtube.com/watch?v=VhwZ9t2b3Zk;License: Standard Youtube License