equired: (a) Compute (i) the cost of goods sold; (ii) gross profit; and (iii) the gross profit rate (in %) for the year 2021. Show workings. (b) Prepare two closing entries to create the Cost of Goods Sold account and update the Inventory account.
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- Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions take place during the current year. A. On July 3, the company purchases thirty fountains for $1,200 per fountain, on credit. Terms of the purchase are 2/10, n/30, invoice dated July 3. B. On August 3, Serene does not pay the amount due and renegotiates with Kirkland. Kirkland agrees to convert the debt owed into a short-term note, with an 8% annual interest rate, payable in two months from August 3. C. On October 3, Serene Company pays its account in full. Record the journal entries to recognize the initial purchase, the conversion, and the payment.Review the following transactions, and prepare any necessary journal entries for Sewing Masters Inc. A. On October 3, Sewing Masters Inc. purchases 800 yards of fabric (Fabric Inventory) at $9.00 per yard from a supplier, on credit. Terms of the purchase are 1/5, n/40 from the invoice date of October 3. B. On October 8, Sewing Masters Inc. purchases 300 more yards of fabric from the same supplier at an increased price of $9.25 per yard, on credit. Terms of the purchase are 5/10, n/20 from the invoice date of October 8. C. On October 18, Sewing Masters pays cash for the amount due to the fabric supplier from the October 8 transaction. D. On October 23, Sewing Masters pays cash for the amount due to the fabric supplier from the October 3 transaction.Air Compressors Inc. purchases compressor parts for its inventory from a supplier. The following transactions take place during the current year: A. On April 5, the company purchases 400 parts for $8.30 per part, on credit. Terms of the purchase are 4/ 10, n/30, invoice dated April 5. B. On May 5, Air Compressors does not pay the amount due and renegotiates with the supplier. The supplier agrees to $400 cash immediately as partial payment on note payable due, converting the debt owed into a short-term note, with a 7% annual interest rate, payable in three months from May 5. C. On August 5, Air Compressors pays its account in full. Record the journal entries to recognize the initial purchase, the conversion plus cash, and the payment.
- Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2019 (unless otherwise indicated), are as follows: During May, the last month of the fiscal year, the following transactions were completed: 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 May, 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). 5. (Optional) Enter the unadjusted trial balance on a 10-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 Balance columns opposite the closing entry. Insert the new balance in the owners capital account. 10. Prepare a post-closing trial balance.On April 20, Barrio Bikes purchased 30 bicycles at a cost of $100 per bike. Credit terms were 4/10, n/30, with an invoice date of April 20. On April 26, Barrio Bikes pays in full for the purchase. Prepare the journal entry or entries to recognize the purchase and subsequent payment if Barrio Bikes uses: A. the perpetual inventory system B. the periodic inventory systemReview the following transactions and prepare any necessary journal entries for Lands Inc. A. On December 10, Lands Inc. contracts with a supplier to purchase 450 plants for its merchandise inventory, on credit, for $12.50 each. Credit terms are 4/15, n/30 from the invoice date of December 10. B. On December 28, Lands pays the amount due in cash to the supplier.
- Review the following transactions and prepare any necessary journal entries for Tolbert Enterprises. A. On April 7, Tolbert Enterprises contracts with a supplier to purchase 300 water bottles for their merchandise inventory, on credit, for $10 each. Credit terms are 2/10, n/60 from the invoice date of April 7. B. On April 15, Tolbert pays the amount due in cash to the supplier.Recording Sale and Purchase Transactions Alpharack Company sells a line of tennis equipment to retailers. Alpharack uses the perpetual inventory system and engaged in the following transactions during April 2019, its first month of operations: a. On April 2, Alpharack purchased, on credit, 360 Wilbur T-100 tennis rackets with credit terms of 2/10, n/30. The rackets were purchased at a cost of S30 each. Alpharack paid Barker Trucking $195 to transport the tennis rackets from the manufacturer to Alpharacks warehouse, shipping terms were F.O.B. shipping point, and the items were shipped on April 2. b. On April 3, Alpharack purchased, for cash, 115 packs of tennis balls for $10 per pack. c. On April 4, Alpharack purchased tennis clothing, on credit, from Designer Tennis Wear. The cost of the clothing was $8,250. Credit terms were 2/10, n/25. d. On April 10, Alpharack paid for the purchase of the tennis rackets in Transaction a. e. On April 15, Alpharack determined that $325 of the tennis clothing was defective. Alpharack returned the defective merchandise to Designer Tennis Wear. f. On April 20, Alpharack sold 1 18 tennis rackets at $90 each, 92 packs of tennis balls at $12 per pack, and $5,380 of tennis clothing. All sales were for cash. The cost of the merchandise sold was $7,580 and no sales returns are expected. g. On April 23, customers returned $860 of the merchandise purchased on April 20. The cost of the merchandise returned was $450. h. On April 25, Alpharack sold another 55 tennis rackets, on credit, for $90 each and 15 packs of tennis balls at $12 per pack, for cash. The cost of the merchandise sold was $1,800. i. On April 29, Alpharack paid Designer Tennis Wear for the clothing purchased on April 4 minus the return on April 15. j. On April 30, Alpharack purchased 20 tennis bags, on credit, from Bag Designs for $320. The bags were shipped F.O.B. destination and arrived at Alpharack on May 3. Required: 1. Prepare the journal entries to record the sale and purchase transactions for Alpharack during April 2019. 2. Assuming operating expenses of $8,500 and income taxes of $1,180, prepare Alpharacks income statement for April 2019.Sunrise Flowers sells flowers to a customer on credit for $130 on October 18, with a cost of sale to Sunrise of $50. What entry to recognize this sale is required if Sunrise Flowers uses a perpetual inventory system?
- On April 5, a customer returns 20 bicycles with a sales price of $250 per bike to Barrio Bikes. Each bike cost Barrio Bikes $100. The customer had yet to pay on their account. The bikes are in sellable condition. Prepare the journal entry or entries to recognize this return if the company uses A. the perpetual inventory system B. the periodic inventory systemRE7-8 Johnson Company uses a perpetual inventory system. On October 23, Johnson purchased 100,000 of inventory on credit with payment terms of 1/15, net 45. Using the net price method, prepare journal entries to record Johnsons purchases on October 23 and the subsequent payment on October 31. Using the information from RE7-8, prepare journal entries to record Johnsons purchase on October 23 and the subsequent payment on November 30.On June 5, Staley Electronics purchases 200 units of inventory on account for $19 each, with terms 2/10, n/30. Staley pays for the inventory on June 12. Required: 1. Record transactions for the purchase of inventory and payment on account using a perpetual system. 2. Now assume payment is made on June 22. Record the payment on account.