Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 2, Problem 2.24AE
Prepare a retailer’s income statement (Learning Objective 5)
Neil Webster is the sole proprietor of Prestigious Pugs, a business specializing in the sale of high-end pet gifts and accessories. Prestigious Pugs’ sales totaled $1,105,000 during the most recent year. During the year, the company spent $55,000 on expenses relating to website maintenance, $30,500 on marketing, and $29,500 on wrapping, boxing, and shipping the goods to customers. Prestigious Pugs also spent $638,000 on inventory purchases and an additional $19,500 on freight-in charges. The company started the year with $16,250 of inventory on hand and ended the year with $16,000 of inventory. Prepare Prestigious Pugs’ income statement for the most recent year.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
(Learning Objectives 1, 2: Apply GAAP for proper revenue recognition; accountfor sales returns and allowances) Treno Industries sells to wholesalers. Customers must paywithin 15 days or at the point of sale using a credit card. Treno’s cost of goods sold is 40% ofsales. The company had the following selected transactions during March:March 3 Sold $15,000 of merchandise to Whittier Company on account.Sold $2,000 of merchandise to Yeller Corp., who paid by credit card. The creditcard company charges Treno a fee of 2% on credit card sales.March 4March 15 Whittier Company paid the balance of what it owed for the purchase on March 3.March 19 Sold $22,000 of merchandise to Zucca Co. on account.March 21 Zucca reported that some of the merchandise received was scratched and returned$1,000 worth of merchandise to Treno.March 23 Sold $32,000 of merchandise to Nichols Co. on account.March 25 Zucca paid the balance of what it owed for the purchase on March 19.March 31 Treno made the adjusting…
(Learning Objective 5: Use the COGS model to make management decisions)Sokol Antiques, Inc., began June with inventory of $48,400. The business made net purchasesof $51,300 and had net sales of $104,000 before a fire destroyed the company’s inventory. Forthe past several years, Sokol’s gross profit percentage has been 35%. Estimate the cost of theinventory destroyed by the fire. Identify another reason that owners and managers use the grossprofit method to estimate inventory.
(Learning Objective 2: Calculate days’ payable outstanding) The balance of LandyCorporation’s accounts payable at the beginning of the most recent year was $50,000. At theend of the year, the accounts payable balance was $54,000. Landy’s sales revenue for the yearwas $3,105,000, while its cost of goods sold for the year was $1,508,000. Calculate Landy’sdays’ payable outstanding (DPO) for the year. Assume inventory levels are constant throughoutthe year. If the credit terms from Landy’s suppliers are n/30, how would you interpret Landy’sDPO?
Chapter 2 Solutions
Managerial Accounting (5th Edition)
Ch. 2 - (Learning Objective 1) Which of the following...Ch. 2 - (Learning Objective 2) Which of the following is...Ch. 2 - (Learning Objective 3) A cost that can be traced...Ch. 2 - (Learning Objective 4) Period costs are often...Ch. 2 - (Learning Objective 4) Conversion costs consist of...Ch. 2 - (Learning Objective 4) Which of the following is...Ch. 2 - Prob. 7QCCh. 2 - (Learning Objective 5) Which of the following...Ch. 2 - Prob. 9QCCh. 2 - Prob. 10QC
Ch. 2 - Short Exercises S2-1 Identify types of companies...Ch. 2 - Identify type of company from balance sheets...Ch. 2 - Classify costs by value chain function (Learning...Ch. 2 - Classify costs as direct or indirect (Learning...Ch. 2 - Prime costs Cost objects Product costs Assigned...Ch. 2 - Prob. 2.6SECh. 2 - Classify product costs and period costs (Learning...Ch. 2 - Classify a manufacturers costs (Learning Objective...Ch. 2 - Classify costs incurred by a dairy processing...Ch. 2 - Determine total manufacturing overhead (Learning...Ch. 2 - Prepare a retailers income statement (Learning...Ch. 2 - Compute Cost of Goods Sold for a merchandiser...Ch. 2 - Calculate direct materials used (Learning...Ch. 2 - Compute Cost of Goods Manufactured (Learning...Ch. 2 - Describe other cost terms (Learning Objectives 6...Ch. 2 - Classify costs as fixed or variable (Learning...Ch. 2 - Prob. 2.17SECh. 2 - Classify costs along the value chain for a...Ch. 2 - Classify costs along the value chain for a...Ch. 2 - Value chain and sustainability efforts (Learning...Ch. 2 - Prob. 2.21AECh. 2 - Construct an income statement using product and...Ch. 2 - Work backward to find missing amounts (Learning...Ch. 2 - Prepare a retailers income statement (Learning...Ch. 2 - Compute direct materials used and Cost of Goods...Ch. 2 - Compute Cost of Goods Manufactured and Cost of...Ch. 2 - Continues E2-26A: Prepare income statement...Ch. 2 - Determine whether information is relevant...Ch. 2 - Prob. 2.29AECh. 2 - Classify costs along the value chain for a...Ch. 2 - Classify costs along the value chain for a...Ch. 2 - Value chain and sustainability efforts (Learning...Ch. 2 - Classify and calculate a manufacturers costs...Ch. 2 - Construct an income statement using product and...Ch. 2 - Work backward to find missing amounts (Learning...Ch. 2 - Prob. 2.36BECh. 2 - Compute direct materials used and Cost of Goods...Ch. 2 - Compute Cost of Goods Manufactured and Cost of...Ch. 2 - Continues E2-38B: Prepare income statement...Ch. 2 - Determine whether information is relevant...Ch. 2 - Prob. 2.41BECh. 2 - Classify costs along the value chain (Learning...Ch. 2 - Determine ending inventory balances (Learning...Ch. 2 - Prepare income statements (Learning Objective 5)...Ch. 2 - Prob. 2.45APCh. 2 - Prob. 2.46APCh. 2 - Classify costs along the value chain (Learning...Ch. 2 - Determine ending inventory balances (Learning...Ch. 2 - Prepare income statements (Learning Objective 5)...Ch. 2 - Prob. 2.50BPCh. 2 - Prob. 2.51BPCh. 2 - Calculate operating income (Learning Objective 5)...Ch. 2 - Prob. 2.53ACT
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- (Learning Objective 2: Compare gross profit—FIFO vs. LIFO—falling prices)Suppose a Walmart store in Fillmore, Missouri, ended January 2018 with 900,000 units ofmerchandise that cost $5 each. Suppose the store then sold 50,000 units for $510,000 duringFebruary. Further, assume the store made two large purchases during February as follows:Feb 10 10,000 units @ $3.10 = $31,00021 25,000 units @ $2.20 = $55,000Requirements1. Calculate the store’s gross profit under both FIFO and LIFO at February 28.2. What caused the FIFO and LIFO gross profit figures to differ?arrow_forwardState College Technology Store is a retial computer store in the university center of a large midwestern university. The school engaged in the following transactions during January of the current year. At December 31 last year, the company’s inventory amounted to $150000. Jan. 8 Purchased 20 Nonpxe laptop computers on account from Led Inc. The laptop comptuers cost $800 each. Payment is due in 30 days Jan. 10 Sold 4 Nopxe laptop computers on account to the Department of Microbiology at State College at a retail sales price of $1200. Unit cost of each laptop was $1000. Prepare journal entries to record these transactions assuming that the company uses periodic inventory system Date Debit Credit Db Cr Date Debit Credit Db Crarrow_forwardState College Technology Store is a retial computer store in the university center of a large midwestern university. The school engaged in the following transactions during January of the current year. At December 31 last year, the company’s inventory amounted to $150000. Jan. 8 Purchased 20 Nonpxe laptop computers on account from Led Inc. The laptop comptuers cost $800 each. Payment is due in 30 days Jan. 10 Sold 4 Nopxe laptop computers on account to the Department of Microbiology at State College at a retail sales price of $1200. Unit cost of each laptop was $1000. a) Prepare journal entries to record these transactions assumingthat the company uses periodic inventory system b. Compute the balance of the Inventory account on January 12 assuming that the company uses periodic inventory system. c. Compute the cost of goods sold assuming use of periodic inventory system. d. To create year-end blance for cost of goods sold, please close the beginning…arrow_forward
- State College Technology Store is a retial computer store in the university center of a large midwestern university. The school engaged in the following transactions during January of the current year. At December 31 last year, the company’s inventory amounted to $150000. Jan. 8 Purchased 20 Nonpxe laptop computers on account from Led Inc. The laptop comptuers cost $800 each. Payment is due in 30 days Jan. 10 Sold 4 Nopxe laptop computers on account to the Department of Microbiology at State College at a retail sales price of $1200. Unit cost of each laptop was $1000. a. Prepare journal entries to record these transactions on January 8 and January 10 assuming that the company uses perpetual inventory system. Date Debit Credit Db Cr Date Debit Credit Db Cr Date Debit Credit Db Crarrow_forwardState College Technology Store is a retial computer store in the university center of a large midwestern university. The school engaged in the following transactions during January of the current year. At December 31 last year, the company’s inventory amounted to $150000. Jan. 8 Purchased 20 Nonpxe laptop computers on account from Led Inc. The laptop comptuers cost $800 each. Payment is due in 30 days Jan. 10 Sold 4 Nopxe laptop computers on account to the Department of Microbiology at State College at a retail sales price of $1200. Unit cost of each laptop was $1000. a) Prepare journal entries to record these transactions assumingthat the company uses periodic inventory system b. Compute the balance of the Inventory account on January 12 assuming that the company uses periodic inventory system. c. Compute the cost of goods sold assuming use of periodic inventory system. d. To create year-end blance for cost of goods sold, please close the beginning…arrow_forwardState College Technology Store is a retial computer store in the university center of a large midwestern university. The school engaged in the following transactions during January of the current year. At December 31 last year, the company’s inventory amounted to $150000. Jan. 8 Purchased 20 Nonpxe laptop computers on account from Led Inc. The laptop comptuers cost $800 each. Payment is due in 30 days Jan. 10 Sold 4 Nopxe laptop computers on account to the Department of Microbiology at State College at a retail sales price of $1200. Unit cost of each laptop was $1000. To create year-end blance for cost of goods sold, please close the beginning inventory, purchases and ending inventory accounts assuming that the company uses periodice inventory system. Date Debit Credit Db Cr Date Debit Credit Db Crarrow_forward
- State College Technology Store is a retial computer store in the university center of a large midwestern university. The school engaged in the following transactions during January of the current year. At December 31 last year, the company’s inventory amounted to $150000. Jan. 8 Purchased 20 Nonpxe laptop computers on account from Led Inc. The laptop comptuers cost $800 each. Payment is due in 30 days Jan. 10 Sold 4 Nopxe laptop computers on account to the Department of Microbiology at State College at a retail sales price of $1200. Unit cost of each laptop was $1000. Compute the balance of the Inventory account on January 12 assuming that the company uses periodic inventory system.arrow_forwardState College Technology Store is a retial computer store in the university center of a large midwestern university. The school engaged in the following transactions during January of the current year. At December 31 last year, the company’s inventory amounted to $150000. Jan. 8 Purchased 20 Nonpxe laptop computers on account from Led Inc. The laptop comptuers cost $800 each. Payment is due in 30 days Jan. 10 Sold 4 Nopxe laptop computers on account to the Department of Microbiology at State College at a retail sales price of $1200. Unit cost of each laptop was $1000. Compute the balance of the Inventory account on January 12 assuming that the company uses periodic inventory system. Compute the cost of goods sold assuming use of periodic inventory system. To create year-end blance for cost of goods sold, please close the beginning inventory, purchases and ending inventory accounts assuming that the company uses periodice inventory system. Date…arrow_forwardCMR Stationery located in Marabella, Trinidad, sells a variety of school suppliesincluding several brands of calculators. The business began the first quarter (Januaryto March) of 2018 with 20 (Casio smart) calculators at a total cost of $124,800.During the quarter, the company completed the following transactions relating to the“Casio smart” calculators.January 8: 105 calculators were purchased at a cost of $6,140 each. In addition, thebusiness paid a freight charge of $310 cash on each calculator to have the inventoryshipped from the point of purchase to their warehouse.January 31: The sales for January were 85 calculators which yielded total salesrevenue of $809,030. (25 of these units were sold on account to longstandingcustomers)February 4: A new batch of 70 calculators was purchased at a total cost of$486,500February 10: 6 of the instruments purchased on February 4 were returned to thesupplier, as they were not of the model ordered.February 28: During the month 62 calculators…arrow_forward
- (Learning Objective 2: Compare gross profit—FIFO vs. LIFO—falling prices)Suppose a Target store in Chicago, Illinois, ended November 2018 with 500,000 units of merchandise that cost $8.00 each. Suppose the store then sold 110,000 units for $960,000 duringDecember. Further, assume the store made two large purchases during December as follows:Dec 8 35,000 units @ $6.10 = $213,50028 50,000 units @ $5.20 = $260,000Requirements1. Calculate the store’s gross profit under FIFO and LIFO at December 31.2. What caused the FIFO and LIFO gross profit figures to differ?arrow_forwardProblem 1. Statement of Comprehensive Income The Sunshine Moments Bookstore sells the books used in classes such as workbooks and coloring books. All the enrolled students (150 students) purchased the three prescribed books at P500 each. The books cost P200 each. Also, sales of various school supplies amounted to P500,000. Costs of these school supplies amounted to P250,000. The monthly salary of the bookstore manager is P20,000. The store is manned by one clerk with monthly salary of P6,000. Utilities expense for the year totals P80,000. Of this, 25* is for the small office at the back of the bookstore. Depreciation for store fixtures amounted to P50,000. Prepare the multi-step income statement for the year ended December 31 for Sunshine Moments Bookstore,arrow_forwardState College Technology Store (SCTS) is a retail computer store in the university center of a large midwesternuniversity. SCTS engaged in the following transactions during November of the current year:Nov. 1 Purchased 20 Nopxe laptop computers on account from Led Inc. The laptop computerscost $800 each, for a total of $16,000. Payment is due in 30 days.Nov. 6 Sold four Nopxe laptop computers on account to the Department of Microbiology atState College at a retail sales price of $1,200 each, for a total of $4,800. Payment isdue in 30 days.Dec. 1 Paid the $16,000 account payable to Led Inc.Dec. 6 Collected the $4,800 account receivable from State College’s Department of Microbiology. Prepare journal entryarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Revenue recognition explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=816Q6pOaGv4;License: Standard Youtube License