Accounting

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Business Finance

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Brief Exercise 5-1

Presented below are the components in Gates Company’s income statement.

Determine the missing amounts.

Sales Revenue

Cost of Goods Sold

Gross Profit

Operating Expenses

Net Income

(a)$78,100

$

$30,400

$

$12,170
(b)$110,410$76,390

$

$

$24,500
(c)

$

$78,520$89,450$47,140

$

Brief Exercise 5-2

Radomir Company buys merchandise on account from Lemke Company. The selling price of the goods is $1,184, and the cost of the goods is $785. Both companies use perpetual inventory systems.

Journalize the transaction on the books of both companies. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) 


Account Titles and Explanation

Debit

Credit

Radomir Company

Lemke Company

(To record credit sale)

(To record cost of merchandise sold)

Brief Exercise 5-7

Arndt Company provides the following information for the month ended October 31, 2014: sales on credit $283,840, cash sales $100,220, sales discounts $7,080, sales returns and allowances $10,580.

Prepare the sales revenues section of the income statement based on this information.

Arndt COMPANY
Income Statement (Partial)
For the Month Ended October 31, 2014

$

$

$

Brief Exercise 5-9

Assume Kader Company has the following reported amounts: Sales revenue $555,900, Sales returns and allowances $16,350, Cost of goods sold $359,700, and Operating expenses $119,900.

(a) Compute net sales.

Net sales
$


(b) Compute gross profit.

Gross profit

$


(c) Compute income from operations.

Income from operations

$


(d) Compute the gross profit rate. (Round answer to 1 decimal place, e.g. 25.2%.)

Gross profit rate

%

Exercise 5-4 (Part level Submission)

On June 10, Tuzun Company purchased $8,900 of merchandise from Epps Company, FOB shipping point, terms 2/10, n/30. Tuzun pays the freight costs of $580 on June 11. Damaged goods totaling $400 are returned to Epps for credit on June 12. The fair value of these goods is $210. On June 19, Tuzun pays Epps Company in full, less the purchase discount. Both companies use a perpetual inventory system.

Exercise 5-6 (Part level Submission)

The adjusted trial balance of Tsai Company shows the following data pertaining to sales at the end of its fiscal year October 31, 2014: Sales Revenue $837,760, Freight-out $16,390, Sales Returns and Allowances $27,230, and Sales Discounts $18,300.

Collapse question part

(a)

Prepare the sales revenues section of the income statement.

Tsai COMPANY
Income Statement (Partial)
For the Year Ended October 31, 2014

$

$

$

Exercise 5-14

Financial information is presented below for three different companies.

Determine the missing amounts.

Allen Cosmetics

Bast Grocery

Corr Wholesalers

Sales revenue$96,970

$

(e)

$133,150
Sales returns and allowances

(a)

5,96013,160
Net sales85,52099,090

(i)

Cost of goods sold55,820

(f)

(j)

Gross profit

(b)

40,19025,800
Operating expenses15,120

(g)

18,160
Income from operations

(c)

(h)

(k)

Other expenses and losses3,8207,450

(l)

Net income

(d)

11,5504,150



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