Requirement 1 and 3
Accounting Cycle: The accounting cycle refers to the entire process of recording the accounting transactions of an organization and then processing them. The accounting cycle starts when a transaction takes places and it ends at the time when these transactions are recorded in the financial statements of the company.
To Open: Four - column general ledger accounts using O’s account numbers and balances as of July 31, 2016.
Requirement 2 and 3:
To Record: The transactions in a sales receipts journal.
Requirement 4
To Prepare: An unadjusted
Requirement 5
To Journalize: The
Requirement 7:
To Prepare: An income statement.
Requirement 9:
To Prepare: Post closing trial balance.
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Horngren's Financial & Managerial Accounting, The Managerial Chapters, Student Value Edition (5th Edition)
- Recording Sale and Purchase Transactions Jordan Footwear sells athletic shoes and uses the perpetual inventory system. During June, Jordan engaged in the following transactions its first month of operations: a. On June1, Jordan purchased, on credit, 100 pairs of basketball shoes and 210 pairs of running shoes with credit terms of 2/10, n/30. The basketball shoes were purchased at a cost of $85 per pair, and the running shoes were purchased at a cost of $60 per pair. Jordan paid Mole Trucking $310 cash to transport the shoes from the manufacturer to Jordans warehouse, shipping terms were F.O.B. shipping point, and the items were shipped on June 1 and arrived on June 4. b. On June 2, Jordan purchased 88 pairs of cross-training shoes for cash. The shoes cost Jordan $65 per pair. c. On June 6, Jordan purchased 125 pairs of tennis shoes on credit. Credit terms were 2/10, n/25. The shoes were purchased at a cost of $45 per pair. d. On June 10, Jordan paid for the purchase of the basketball shoes and the running shoes in Transaction a. e. On June 12, Jordan determined that $585 of the tennis shoes were defective. Jordan returned the defective merchandise to the manufacturer. f. On June 18, Jordan sold 50 pairs of basketball shoes at $116 per pair, 92 pairs of running shoes for S85 per pair, 21 pairs of cross-training shoes for $100 per pair, and 48 pairs of tennis shoes for $68 per pair. All sales were for cash. The cost of the merchandise sold was $13,295. No sales returns are expected. g. On June 21, customers returned 10 pairs of the basketball shoes purchased on June 18. The cost of the merchandise returned was $850. h. On June 23, Jordan sold another 20 pairs of basketball shoes, on credit, for $116 per pair and 15 pairs of cross-training shoes for $100 cash per pair. The cost of the merchandise sold was $2,675. i. On June 30, Jordan paid for the June 6 purchase of tennis shoes minus the return on June 12. j. On June 30, Jordan purchased 60 pairs of basketball shoes, on credit, for S85 each. The shoes were shipped F.O.B. destination and arrived at Jordan on July 3. Required: 1. Prepare the journal entries to record the sale and purchase transactions for Jordan during June 2019. 2. Assuming operating expenses of $5,300 and income taxes of $365, prepare Jordans income statement for June 2019.arrow_forwardCostco, Walmart, Nordstrom: Inventory turnover and number of days sales in inventory The general merchandise retail industry has a number of segments represented by the following companies: Company Name Merchandise Concept Costco Wholesale Corporation Membership warehouse Walmart Stores, Inc. Discount general merchandise Nordstrom, Inc. Fashion department store For a recent year, the following cost of goods sold and beginning and ending inventories are provided from corporate annual reports (in millions) for these three companies: Costco Walmart Nordstrom Cost of goods sold 98,458 365,086 8,406 Inventories: Beginning of year 7,894 44,858 1,531 End of year 8,456 45,141 1,733 A. Determine the inventory turnover ratio for all three companies. (Round all calculations to one decimal place.) B. Determine the number of days sales in inventory for all three companies. (Use 365 days and round all calculations to one decimal place.) C. Interpret these results based on each companys merchandising concept.arrow_forwardJOURNALIZE ADJUSTING ENTRY FOR A MERCHANDISING BUSINESS: PERPETUAL INVENTORY SYSTEM On December 31, Anup Enterprises completed a physical count of its inventory. Although the merchandise inventory account shows a balance of 200,000, the physical count comes to 210,000. Prepare the appropriate adjusting entry under the perpetual inventory systemarrow_forward
- Perpetual and Periodic Inventory Systems Following is a partial list of account balances for two different merchandising companies. The amounts in the accounts represent the balances at the end of the year before any adjustments are made or the books are closed. Required Identify which inventory system, perpetual or periodic, each of the two companies uses. Explain how you know which systemeach company uses by looking at the types of accounts on its books. How much inventory should Company A have on hand at the end of the year? What is its cost of goods sold for the year? Explain why you cannot determine Company Bs cost of goods sold for the year from the information available.arrow_forwardCommunication Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Sales: The president of the company, Connie Kilmer, has asked for your advice on which inventory cost flow method should be used for the 32,000-unit physical inventory that was taken on December 31. The company plans to expand its product line in the future and uses the periodic inventory system. Write a brief memo to Ms. Kilmer comparing and contrasting the LIFO and FIFO inventory cost flow methods and their potential impacts on the companys financial statements.arrow_forwardAppendix 2 Sales and purchase-related transactions for buyer and seller using periodic inventory system Selected transactions during April between Swan Company and Bird Company are listed in Problem 5-4B. Instructions Journalize the entries to record the transactions for (1) Swan Company and (2) Bird Company assuming that both companies use the periodic inventory system.arrow_forward
- JOURNAL ENTRIESPERIODIC INVENTORY Paul Nasipak owns a business called Diamond Distributors. The following transactions took place during January of the current year. Journalize the transactions in a general journal using the periodic inventory method. Jan.5 Purchased merchandise on account from Prestigious Jewelers, 3,300. 8 Paid freight charge on merchandise purchased, 300. 12 Sold merchandise on account to Diamonds Unlimited, 4,500. 15 Received a credit memo from Prestigious Jewelers for merchandise returned, 700. 22 Issued a credit memo to Diamonds Unlimited for merchandise returned, 900.arrow_forwardPalisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2016 (unless otherwise indicated), are as follows: During May, the last month of the fiscal year, the following transactions were completed: 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 merchandise sold 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 returned merchandise from sale of May 6. The invoice amount of the returned merchandise was 13,500 and the cost of the returned merchandise was 8,000. Record the following transactions on Page 21 of the journal: 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 of May 20, 2,300. 21. Received 42,900 cash from Gee Co. on account. May 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, receiving a credit memo from the seller for 5,000. 26. Refunded cash on sales made for cash, 7,500. The cost of the merchandise 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 May 21. 31. Paid for purchase of May 21, less return of May 24. Instructions 1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark () in the Posting Reference column. Journalize the transactions for July, starting on Page 20 of the journal. 2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). f. The adjustment for customer returns and allowances is 60,000 for sales and 35,000 for cost of merchandise sold. 5. (Optional) Enter the unadjusted trial balance on a IO-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 22 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owners equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the owners capital account. 10. Prepare a post-closing trial balance.arrow_forwardAdjusting Entries Two months (July and August) have passed since Ms. Valli has seen the financial statements for All About You Spa. It is time to begin their preparation. Several accounts need adjusting. These include the accounts you adjusted in Chapter 4 as well as any accounts involved with merchandising. Adjusting Entry Information Merchandise Inventory Adjustment (a) A physical count of inventory was taken, and the inventory was valued at 11,310. Supplies Adjustments (b) and (c) A physical count has been taken of the two supplies accounts. The values of the remaining inventories of supplies are as follows: Prepaid Insurance Adjustment (d) A review of the insurance records determined that 233.34 in liability insurance coverage had been used during the last two months. Depreciation Adjustments (e) and (f) Estimated depreciation amounts for the two equipment accounts are as follows: Wages Expense/Wages Payable Adjustment There is no need for a Wages Expense/Wages Payable adjustment because the end of the fiscal period did not come in the middle of a pay period. Required 1. Complete a work sheet (if required by your instructor). Ignore this step if using CLGL. 2. Journalize the adjusting entries in the general journal. If you are preparing the adjusting entries with Working Papers, enter your transactions beginning on page 16. 3. Post the adjusting entries to the general ledger accounts. Ignore this step if you are using CLGL. 4. Prepare an adjusted trial balance as of August 31, 20--.arrow_forward
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