I-05.01
Tic Toc Clock Shop reported the following merchandising-related transactions during June. Tic
Tock Clock Shop records all purchases "gross," and credit terms are precisely followed on both
purchases and sales.
Prepare journal entries to record each transaction.
3-Jun
Purchased $4,000 of clocks on account from Swiss Time, F.O.B. destination, terms
1/10, n/30.
5-Jun
Sold a $1,500 clock to Janci Holgren on account, terms 2/10, n/eom. The customer
picked up the clock from the shop.
9-Jun
Paid the amount due for the purchase of June 3.
11-Jun
Purchased $8,000 of clocks on account from Melbourne Clockworks, F.O.B. shipping
point, terms 2/10, n/30. Freight charges of $460 were prepaid by Melbourne and
added to the invoice. No discount is permitted on the freight charges.
19-Jun
Sold a $3,500 clock on account, terms 2/10, n/eom. Tic Toc sold the clock F.O.B.
destination, and paid the freight charges of $330.
23-Jun
The customer of June 19 called to report that the clock was received damaged. An
agreement was reached to reduce the invoice by 20%.
27-Jun
Paid Melbourne Clockworks for the purchase of June 11.
27-Jun
Janci Holgren paid for the purchase of June 5.
28-Jun
The customer of June 19 paid the balance due.
Name:
I-05.01
Date:
Section:
GENERAL JOURNAL
Date
Page
Accounts
Debit
3-Jun
Purchased
1/10,n/30
clocks
on
account,
terms
5-Jun
Sold clock on account, terms 2/10, n/eom
9-Jun
Paid for the puchase of June 3, taking the
1% discount
11-Jun
Purchased clocks on account, 2/10,n/30,
F.O.B. shipping point
19-Jun
Sold clock on account, 2/10, n/eom, F.O.B.
destination
23-Jun
Reduced balance due from customer on
account of damage
Credit
Name:
I-05.01
Date:
Section:
GENERAL JOURNAL
Date
Page
Accounts
27-Jun
Paid the full amount due for the purchase
of June 11
27-Jun
Collected the amount due for the sale on
June 5
28-Jun
Collected remaining amount for June 19
sale, less 2% discount
Debit
Credit
B-05.05
Gunnison Creamery produces a variety of specialty ice creams and buys ingredients from many
suppliers. Each supplier seems to have unique policies about discounts and freight terms. Gunnison
Creamery records all purchases "gross" and uses a periodic inventory system.
Gunnison recently hired a new bookkeeper and needs your help to develop a template of sample
journal entries for different scenarios. For purposes of preparing the template, assume that the
purchase is $1,000 and freight is $100.
Scenario
Cash
Discount
Freight
Terms
Discount
Condition
1
2
3
4
5
6
2/10, n/30
2/10, n/30
2/10, n/30
2/10, n/30
2/10, n/30
2/10, n/30
F.O.B. Shipping point/freight prepaid
F.O.B. Shipping point/freight prepaid
F.O.B. Destination/freight prepaid
F.O.B. Destination/freight prepaid
F.O.B. Shipping point/freight collect
F.O.B. Shipping point/freight collect
taken
missed
taken
missed
taken
missed
The first scenario is done as an example on the preprinted worksheet, and the electronic spreadsheet
version expedites your solution by including a journal pick list of the following accounts:
Cash
Purchases
Accounts
Payable
Purchase
Discounts
Freight-in
Name:
B-05.05
Date:
Section:
1 GENERAL JOURNAL
Date
Page
Accounts
purchase Purchases
Debit
Credit
1,000
Freight-in
100
Accounts Payable
1,100
F.O.B. Shipping point/freight prepaid
pay
Accounts Payable
1,100
Purchase Discounts
20
Cash
1,080
discount taken
2 GENERAL JOURNAL
Date
Page
Accounts
Debit
Credit
purchase
F.O.B. Shipping point/freight prepaid
pay
discount missed
3 GENERAL JOURNAL
Page
Name:
B-05.05
Date:
Section:
Date
Accounts
Debit
Credit
purchase
F.O.B. Destination/freight prepaid
pay
discount taken
4 GENERAL JOURNAL
Date
Page
Accounts
Debit
Credit
purchase
F.O.B. Destination/freight prepaid
pay
discount missed
5 GENERAL JOURNAL
Date
purchase
Page
Accounts
Debit
Credit
Name:
B-05.05
Date:
Section:
F.O.B. Shipping point/freight collect
pay
discount taken
6 GENERAL JOURNAL
Date
Page
Accounts
purchase
F.O.B. Shipping point/freight collect
pay
discount missed
Debit
Credit
B-05.07
Pitkin Health Care Products provides the following alphabetic list of accounts and their respective
balances. All accounts have normal balances, and income statement account balances are for the
year ending December 31, 20X4. A physical count of merchandise inventory on hand at year end
revealed a balance of $277,390. Use this information to prepare a comprehensive income
statement.
Accounts payable
Accounts receivable
Accumulated depreciation
Beginning inventory, Jan. 1
Capital stock
Cash
Depreciation expense
Dividends
Equipment
Freight-in
Freight-out
Insurance expense
Marketing expense
Note Payable
Purchase discounts
Purchase returns & allowances
Purchases
Rent expense
Retained earnings, Jan. 1
Salaries expense
Salaries payable
Sales
Sales discounts
Sales returns and allowances
Utilities expense
$
93,789
82,890
166,554
244,956
144,000
25,442
65,990
12,000
324,556
43,441
3,566
8,700
111,991
250,000
1,788
6,665
433,443
42,335
24,327
233,998
9,955
977,932
8,817
13,998
18,887
Name:
Date:
B-05.07
Section:
PITKIN HEALTHCARE PRODUCTS
Income Statement
For the Year Ending December 31, 20X4
B-08.04
Patti Devine owns Devine Decorating. One of her most popular items is the Remind-a-Chime digital
clock. This programmable clock issues "voice-based" reminders of important events like birthdays,
anniversaries, etc.
Following is the Remind-a-Clock inventory activity for January. The clocks on hand at January 1 had a
unit cost of $140.
Date
Purchases
Sales
1-Jan
5-Jan
40
60 units @ $150 each
16-Jan
23-Jan
28-Jan
Units on
Hand
100
70 units @ $255 each
90 units @ $170 each
30
120
55 units @ $295 each
65
(a)
If Devine uses the first-in, first-out (FIFO) inventory method (periodic approach), what values
would be assigned to ending inventory and cost of goods sold? How much is gross profit?
(b)
If Devine uses the last-in, first-out (LIFO) inventory method (periodic approach), what values
would be assigned to ending inventory and cost of goods sold? How much is gross profit?
(c)
If Devine uses the weighted-average inventory method (periodic approach), what values would
be assigned to ending inventory and cost of goods sold? How much is gross profit?
Name:
Date:
(a)
B-08.04
Section:
FIFO
Beginning inventory
$
-
$
-
Cost of goods sold
$
-
Sales
$
-
$
-
$
-
$
-
Cost of goods sold
$
-
Sales
$
-
$
-
$
-
$
-
Cost of goods sold
$
-
Sales
$
-
$
-
Plus: Purchases
Cost of goods available for sale
Less: Ending inventory
Cost of goods sold
Gross profit
(b)
LIFO
Beginning inventory
Plus: Purchases
Cost of goods available for sale
Less: Ending inventory
Cost of goods sold
Gross profit
(c)
Weighted-average
Beginning inventory
Plus: Purchases
Cost of goods available for sale
Less: Ending inventory
Cost of goods sold
Gross profit
B-08.05
Tom Pryor is conducting an audit of the computerized inventory system used by Zix Corporation. Tom has inserted
hypothetical data into the computer program that tracks inventory on a perpetual basis. Below are the hypotheical data
inserted by Tom:
Transaction
Beginning inventory
Units
10
Cost per unit
$10
Purchase, day 1
5
$11
Sale, day 2
6
Purchase, day 3
8
Sale, day 4
9
$12
The computer program returned the following ending inventory values:
FIFO perpetual, $96
LIFO perpetual, $80
Moving average, $88
Which of the three values appears to be incorrect, and what "error" might be causing this condition?
FIFO perpetual:
Date
Day 0
Day 1
Purchases
5 X $11 = $55
Day 2
Day 3
8 X $12 = $96
Day 4
Ending
LIFO perpetual:
Cost of Goods Sold
Balance
10 X $10 = $100
B-08.05
Date
Day 0
Day 1
Purchases
Cost of Goods Sold
Balance
10 X $10 = $100
Cost of Goods Sold
Balance
10 X $10 = $100
5 X $11 = $55
Day 2
Day 3
8 X $12 = $96
Day 4
Ending
Moving average:
Date
Day 0
Day 1
Purchases
5 X $11 = $55
Day 2
Day 3
8 X $12 = $96
Day 4
Ending
rporation. Tom has inserted
elow are the hypotheical data
dition?
B-08.05
B-08.08
Doyle's Art buys and sells paintings from emerging artists. The values of the works are prone to
fluctuate considerably based on the ever changing stature of a particular artist. Following is a listing of
6 paintings, along with their costs, estimated selling prices, and expected selling costs (inclusive of
commissions and shipping).
Painting
Cost
Fire on Hill
$
1,000
Estimated Estimated
Selling
Selling
Price
Expense
$
1,400
$
400
Horses in Aspen Grove
2,500
800
100
Baby's First Smile
3,000
6,000
500
Endless War
2,000
2,200
300
Rain Drop on Cactus
1,500
2,500
400
Election Day Upset
2,300
1,600
200
(a)
What unit value should be attached to each painting, assuming item-byitem application of the lower-of-cost-or-net-realizable-value rule?
Fire
Cost
Expected selling price
Selling expense
Net realizable value
VALUE TO REPORT
Horse
Baby
War
Rain
Election
B-08.11
Bell Computers assembles and sells notebook styled computers. The company is attempting
to better manage cash flow and reduce inventory. The most recent strategy has been to
require major vendors to establish warehouses adjacent to Bell's factory locations. Bell then
buys components from vendors as needed for same day delivery.
During 20X2, Bell had beginning inventory of $23,000,000 and cost of goods sold
$168,000,000. Inventory at the end of 20X2 was $33,000,000. During 20X3, cost of goods
sold was $440,000,000. Inventory at the end of 20X3 was $55,000,000.
Q:
A:
One of Bell's product managers was very disappointed with the continuing increase in
inventory from the beginning of 20X2 through the end of 20X3. He felt his directives to
better manage inventory were not being followed. Prepare an inventory turnover ratio
analysis for 20X2 and 20X3. Based on your analysis, is the company better managing
inventory levels?
20X2 Inventory Turnover Ratio
=
20X3 Inventory Turnover Ratio
=
Purchase answer to see full
attachment