Bundle: Financial & Managerial Accounting, 14th + Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th + Working Papers, ... & Managerial Accounting, 14th + CengageNOWv2,
14th Edition
ISBN: 9781337804011
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 5, Problem 5.10BPR
Appendix
Periodic inventory accounts, multiple-step income statement, closing entries
On June 30, 2018, the balances of the accounts appearing in the ledger of Simkins Company are as follows:
Cash $ 125,000 | Dividends $ 275,000 |
Accounts Receivable 72,000 | Sales 6,590,000 |
Inventory, July 1, 2017 415,000 | Purchases 4,100,000 |
Estimated Returns Inventory, July 1,2017 25,000 | Purchases Returns and Allowances 32,000 |
Purchases Discounts 13,000 | |
Office Supplies 9,000 | Freight In 45,000 |
Prepaid Insurance 18,000 | Sales Salaries Expense 580,000 |
Land 300,000 | Advertising Expense 315,000 |
Store Equipment 550,000 | Delivery Expense 18,000 |
Depreciation Expense— Store Equipment 12,000 | |
Office Equipment 250,000 | Miscellaneous Selling Expense 28,000 |
Accumulated Depreciation— Office Equipment 110,000 | Office Salaries Expense 375,000 |
Rent Expense 43,000 | |
Accounts Payable 85,000 | Insurance Expense 17,000 |
Salaries Payable 30,000 | Office Supplies Expense 5,000 |
Customer Refunds Payable 9,000 | Depreciation Expense— Office Equipment 4,000 |
Unearned Rent 6,000 | |
Notes Payable 50,000 | Miscellaneous Administrative Expense 16,000 |
Common Stock 300,000 | Rent Revenue 32,500 |
Interest Expense 2,500 |
Instructions
- 1. Does Simkins Company use a periodic or perpetual inventory system? Explain.
- 2. Prepare a multiple-step income statement for Simkins Company for the year ended June 30, 2018. The inventory as of June 30, 2018, was $508,000. The estimated cost of customer returns inventory for June 30, 2018, is estimated to increase to $33,000.
- 3. Prepare the closing entries for Simkins Company as of June 30, 2018.
- 4. What would be the net income if the perpetual inventory system had been used?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Blossom Company’s balance sheet at December 31, 2021, is presented below.
Blossom CompanyBalance SheetDecember 31, 2021
Cash
$13,600
Accounts payable
$9,000
Accounts receivable
19,100
Owner’s capital
32,200
Allowance for doubtful accounts
(900
)
Inventory
9,400
$41,200
$41,200
During January 2022, the following transactions occurred. Blossom uses the perpetual inventory method.
Jan. 1
Blossom accepted a 4-month, 8% note from Merando Company in payment of Merando’s $1,200 account.
3
Blossom wrote off as uncollectible the accounts of Inwood Corporation ($400) and Goza Company ($300).
8
Blossom purchased $17,400 of inventory on account.
11
Blossom sold for $27,500 on account inventory that cost $17,700.
15
Blossom sold inventory that cost $800 to Mark Lauber for $1,400. Lauber charged this amount on his Visa First Bank card. The service fee charged Blossom by First Bank is 3%.
17…
Carla Vista Co.'s balance sheet at December 31.2021, is presented below.
Carla Vista Co.
Balance Sheet
December 31, 2021
$9,230
Accounts payable
Common stock
Cash
$14,340
Accounts receivable
19,700
21,700
Allowance for doubtful accounts
(860)
Retained earnings
12.230
Inventory
9,980
$43.160
$43,160
During January 2022, the following transactions occurred. Carla Vista uses the perpetual inventory method.
Jan.
Carla Vista accepted a 4-month, 8% note from Betheny Company in payment of Betheny's $3,600 account.
1.
3
Carla Vista wrote off as uncollectible the accounts of Walter Corporation ($400) and Drake Company ($300).
Carla Vista purchased $18,210 of inventory on account.
Carla Vista sold for $27,000 on account inventory that cost $16,920.
Carla Vista sold inventory that cost $680 to Jack Rice for $90O. Rice charged this amount on his Visa First Bank card. The
service fee charged Carla Vista by First Bank is 3%.
11
15
17
Carla Vista collected $23,600 from customers on account.
Carla…
The following selected information is presented for Bramble Limited for the year ended February 28, 2021. Bramble uses a periodic
inventory system.
Accounts recelvable
$27,300
Inventory, Mar. 1. 2020
$45,880
Administrative expenses
101.560
Inventory, Feb, 28, 2021
66,640
Common shares
71.400
Purchase discounts
32,760
Deferred revenue
3,780
Purchase returns and allowances
17,480
Dividends declared
35.280
Purchases
229,320
Freight in
7.100
Sales
329.880
Income tax expense
7,820
Selling expenses
7,640
Interest expense
6,560
(a)
Prepare a multiple-step statement
income.
Chapter 5 Solutions
Bundle: Financial & Managerial Accounting, 14th + Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th + Working Papers, ... & Managerial Accounting, 14th + CengageNOWv2,
Ch. 5 - Prob. 1DQCh. 5 - Prob. 2DQCh. 5 - The credit period during which the buyer of...Ch. 5 - What is the meaning of (A) 1/15, n/60; (B) n/30;...Ch. 5 - How are sales to customers using .MasterCard and...Ch. 5 - Prob. 6DQCh. 5 - Prob. 7DQCh. 5 - Name three accounts that would normally appear in...Ch. 5 - Audio Outfitter Inc., which uses a perpetual...Ch. 5 - Prob. 10DQ
Ch. 5 - Gross profit During the current year, merchandise...Ch. 5 - Purchases transactions Hoffman Company purchased...Ch. 5 - Prob. 5.3BECh. 5 - Freight terms Determine the amount to be paid in...Ch. 5 - Transactions for buyer and seller Shore Co. sold...Ch. 5 - Adjusting entries Halm Flooring Company uses a...Ch. 5 - Determining gross profit During the current year,...Ch. 5 - Determining cost of goods sold For a recent year....Ch. 5 - Purchase-related transactions The Stationery...Ch. 5 - Purchase-related transactions A retailer is...Ch. 5 - Purchase-related transactions The debits and...Ch. 5 - Prob. 5.6EXCh. 5 - Prob. 5.7EXCh. 5 - Sales-related transactions, including the use of...Ch. 5 - Customer refund Senger Company sold merchandise of...Ch. 5 - Prob. 5.10EXCh. 5 - Prob. 5.11EXCh. 5 - Sales-related transactions The debits and credits...Ch. 5 - Prob. 5.13EXCh. 5 - Determining amounts to be paid on invoices...Ch. 5 - Sales-related transactions Showcase Co., a...Ch. 5 - Purchase-related transactions Based on the data...Ch. 5 - Prob. 5.17EXCh. 5 - Prob. 5.18EXCh. 5 - Prob. 5.19EXCh. 5 - Normal balances of merchandise accounts What is...Ch. 5 - Income statement and accounts for merchandiser For...Ch. 5 - Income statement for merchandiser The following...Ch. 5 - Determining amounts for items omitted from income...Ch. 5 - Multiple-step income statement On March 31, 2018,...Ch. 5 - Multiple-step income statement The following...Ch. 5 - Single-step income statement Summary operating...Ch. 5 - Prob. 5.27EXCh. 5 - Adjusting entry for customer refunds, allowances,...Ch. 5 - Adjusting entry for inventory shrinkage Omega Tire...Ch. 5 - Closing the accounts of a merchandiser From the...Ch. 5 - Closing entries; net income Based on the data...Ch. 5 - Closing entries On July 31, the close of the...Ch. 5 - Prob. 5.33EXCh. 5 - Prob. 5.34EXCh. 5 - Prob. 5.35EXCh. 5 - Cost of goods sold and related items The following...Ch. 5 - Cost of goods sold Based on the following data,...Ch. 5 - Cost of goods sold Based on the following data,...Ch. 5 - Prob. 5.39EXCh. 5 - Prob. 5.40EXCh. 5 - Purchase-related transactions using perpetual...Ch. 5 - Sales-related transactions using perpetual...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Multiple-step income statement and balance sheet...Ch. 5 - Single-step income statement and balance sheet...Ch. 5 - Appendix Purchase-related transactions using...Ch. 5 - Appendix Sales-related and purchase-related...Ch. 5 - Appendix Sales-related and purchase-related...Ch. 5 - Appendix Periodic inventory accounts,...Ch. 5 - Purchase-related transactions using perpetual...Ch. 5 - Sales-related transactions using perpetual...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Multiple-step income statement and balance sheet...Ch. 5 - Single-step income statement and balance sheet...Ch. 5 - Appendix Purchase-related transactions using...Ch. 5 - Prob. 5.8BPRCh. 5 - Appendix Sales-related and purchase-related...Ch. 5 - Appendix Periodic inventory accounts,...Ch. 5 - Palisade Creek Co. is a merchandising business...Ch. 5 - Continuing Company Analysis-Amazon: Asset turnover...Ch. 5 - Home Depot: Asset turnover ratio The Home Depot...Ch. 5 - Prob. 3ADMCh. 5 - Prob. 4ADMCh. 5 - Ethics in Action Margie Johnson is a staff...Ch. 5 - Communication Suzi Nomro operates Watercraft...
Additional Business Textbook Solutions
Find more solutions based on key concepts
1. For Frank’s Funky Sounds, straight-line depreciation on the trucks is a
Learning Objective 1
a. variable cos...
Horngren's Accounting (12th Edition)
Bank loan; accrued interest LO132 On October 1, Eder Fabrication borrowed 60 million and issued a nine-month, ...
Intermediate Accounting
Disposal of assets. Answer the following questions. 1. A company has an inventory of 1,300 assorted parts for a...
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Discussion Analysis A13-41 Discussion Questions 1. How do managers use the statement of cash flows? 2. Describ...
Managerial Accounting (5th Edition)
List five asset accounts, three liability accounts, and five expense accounts included in the acquisition and p...
Auditing And Assurance Services
Knowledge Booster
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.Similar questions
- On June 30, 2019, the balances of the accounts appearing in the ledger of Simkins Company are as follows: Instructions 1. Does Simkins Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Simkins Company for the year ended June 30, 2019. The merchandise inventory as of June 30, 2019, was 508,000. The adjustment for estimated returns inventory for sales for the year ending December 31, 2019, was 33,000. 3. Prepare the closing entries for Simkins Company as of June 30, 2019. 4. What would the net income have been if the perpetual inventory system had been used?arrow_forwardReid Company uses the periodic inventory system. On January 1, it had an inventory balance of 250,000. During the year, it made 613,000 of net purchases. At the end of the year, a physical inventory showed it had ending inventory of 140,000. Calculate Reid Companys cost of goods sold for the year.arrow_forwardFinancial statement data for years ending December 31 for Holland Company follow: a. Determine the inventory turnover for 20Y4 and 20Y3. b. Determine the days sales in inventory for 20Y4 and 20Y3. Use 365 days and round to one decimal place. c. Does the change in inventory turnover and the days sales in inventory from 20Y3 to 20Y4 indicate a favorable or an unfavorable trend?arrow_forward
- Financial statement data for years ending December 31 for Tango Company follow: a. Determine the inventory turnover for 20Y7 and 20Y6. b. Determine the days sales in inventory for 20Y7 and 20Y6. Use 365 days and round to one decimal place. c. Does the change in inventory turnover and the days sales in inventory from 20Y6 to 20Y7 indicate a favorable or an unfavorable trend?arrow_forwardInventory Analysis Singleton Inc. reported the following information for the current year: Required: Compute Singletons (a) gross profit ratio, (b) inventory turnover ratio, and (c) average days to sell inventory. (Note: Round all answers to two decimal places.)arrow_forwardBasga Company uses the periodic inventory system. Beginning inventory amounted to 241,072. A physical count reveals that the latest inventory amount is 256,339. Record the adjusting entries, using T accounts.arrow_forward
- Analyzing Inventory The recent financial statements of McLelland Clothing Inc. include the following data: Required: 1. Calculate McLellands gross profit ratio (rounded to two decimal places), inventory turnover ratio (rounded to three decimal places), and the average days to sell inventory (assume a 365-day year and round to two decimal places) using the FIFO inventory costing method. Be sure to explain what each ratio means. 2. Calculate McLellands gross profit ratio (rounded to two decimal places), inventory turnover ratio (rounded to three decimal places), and the average days to sell inventory (assume a 365-day year and round to two decimal places) using the LIFO inventory costing method. Be sure to explain what each ratio means. 3. CONCEPTUAL CONNECTION Which ratios-the ones computed using FIFO or LIFO inventory values-provide the better indicator of how successful McLelland was at managing and controlling its inventory?arrow_forwardThe following selected information is taken from the financial statements of Arnn Company for its most recent year of operations: During the year, Arnn had net sales of 2.45 million. The cost of goods sold was 1.3 million. Required: Note: Round all answers to two decimal places. 1. Compute the current ratio. 2. Compute the quick or acid-test ratio. 3. Compute the accounts receivable turnover ratio. 4. Compute the accounts receivable turnover in days. 5. Compute the inventory turnover ratio. 6. Compute the inventory turnover in days.arrow_forwardRescue Sequences LLC purchased inventory by issuing a 30,000, 10%, 60-day note on October 1. Prepare the journal entries for Rescue Sequences to record the purchase and payment assuming it uses a perpetual inventory system and a 360-day calendar fiscal year. Rescue Sequences LLC uses a perpetual inventory system.arrow_forward
- Inventory Analysis Callahan Company reported the following information for the current year. Required: 1. Compute Callahans (a) gross profit ratio, (b) inventory turnover ratio, and (c) average days to sell inventory. (Round all answers to two decimal places.) 2. Explain the meaning of each number.arrow_forwardAnalyzing the Accounts Casey Company uses a perpetual inventory system and engaged in the following transactions: a. Made credit sales of $825,000. The cost of the merchandise sold was $560,000. b. Collected accounts receivable in the amount of $752,600. c. Purchased goods on credit in the amount of $574,300. d. Paid accounts payable in the amount of $536,200. Required: Prepare the journal entries necessary to record the transactions. Indicate whether each transaction increased cash, decreased cash, or had no effect on cash.arrow_forwardThe following is selected information from Mars Corp. Inventory, February 28, 2018 $453,000 Inventory, March 31, 2018 332,000 Purchase Discounts 12,550 Purchase Returns and Allowances 23,840 Sales 277,800 Sales Discounts 34,620 Gross Purchases 127,900 Compute net purchases, and cost of goods sold for the month of March. Assume the perpetual and periodic methods are used. Net purchases $fill in the blank 1 Cost of Goods Sold $fill in the blank 2arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
The KEY to Understanding Financial Statements; Author: Accounting Stuff;https://www.youtube.com/watch?v=_F6a0ddbjtI;License: Standard Youtube License