Campus Stop, Inc., is a student co-op. Campus Stop uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $152,590). $ 276,700 b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $810). 1,610 c. Sold merchandise (costing $9,450) to a customer on account with terms n/30. 21,000 d. Collected half of the balance owed by the customer in (c). 10,500 e. Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. 1,820 CP6-3 Part 4 Campus Stop is considering a contract to sell merchandise to a campus organization for $16,000. This merchandise will cost Campus Stop $12,500. Would this contract increase (or decrease) Campus Stop’s dollars of gross profit and its gross profit percentage? TIP: The impact on gross profit dollars may differ from the impact on gross profit percentage. (Round "Gross Profit Percentage" to 1 decimal place.)
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Required information
CP6-3 Recording Cash Sales, Credit Sales, Sales Returns, and Sales Allowances and Analyzing Gross Profit Percentage [LO 6-4, LO 6-6]
[The following information applies to the questions displayed below.]
Campus Stop, Inc., is a student co-op. Campus Stop uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis:
| a. | Sold merchandise for cash (cost of merchandise $152,590). | $ | 276,700 | |
| b. | Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $810). | 1,610 | ||
| c. | Sold merchandise (costing $9,450) to a customer on account with terms n/30. | 21,000 | ||
| d. | Collected half of the balance owed by the customer in (c). | 10,500 | ||
| e. | Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. | 1,820 | ||
CP6-3 Part 4
- Campus Stop is considering a contract to sell merchandise to a campus organization for $16,000. This merchandise will cost Campus Stop $12,500. Would this contract increase (or decrease) Campus Stop’s dollars of gross profit and its gross profit percentage? TIP: The impact on gross profit dollars may differ from the impact on gross profit percentage. (Round "Gross Profit Percentage" to 1 decimal place.)
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