Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 3, Problem 4E
Exercise 3-4 Effect of inventory transactions on the income statement and statement of
During 2018, Hardy Merchandising Company purchased $40,000 of inventory on account. Hardy sold inventory on account that cost $24,500 for $38,000. Cash payments on accounts payable were $22,000. There was $26,000 cash collected from
Required
a. Identify the events described in the preceding paragraph and record them in a horizontal statements model like the following one.
b. What is the balance of accounts receivable at the end of 2018?
c. What is the balance of accounts payable at the end of 2018?
d. What are the amounts of gross margin and net income for 2018?
e. Determine the amount of net cash flow from operating activities.
f. Explain why net income and
g. Normally would these amounts be the same? Why or why not?
Expert Solution & Answer
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Consider the following financial statement information:
Item
Beginning
Year
Ending
Inventory
€ 9.780
€ 11.380
€ 4.108
€
4.938
€ 7.636
€ 7.927
Accounts Receivable
Accounts Payable
Credit Sales
Cost of Goods Sold
€ 89.804
€ 56.384
Calculate the operating and cash cycles. How do you
interpret your answer?
Data table
Account Title
Cash
Accounts Receivable
Merchandise Inventory
Office Supplies
Equipment
Accumulated Depreciation Equipment
Accounts Payable
Salaries Payable
Notes Payable, long-term
Moray, Capital
Moray, Withdrawals
Sales Revenue
Cost of Goods Sold
Selling Expense
Administrative Expense
Budget Office Systems
Adjusted Trial Balance
March 31, 2018
Interest Expense
Total
$
Debit
Balance
4,300
13,400
31,400
7,000
42,800
40,000
SA
106,200
27,200
14,000
2,200
288,500 $
Credit
13,300
9,600
900
8,100
20,600
236,000
288,500
X
Data table
Account Title
Cash
Accounts Receivable
Merchandise Inventory
Quality Service Systems
Adjusted Trial Balance
March 31, 2018
Office Supplies
Equipment
Accumulated Depreciation Equipment
Accounts Payable
Salaries Payable
Notes Payable, long-term
Miller, Capital
Miller, Withdrawals
Sales Revenue
Cost of Goods Sold
Selling Expense
Administrative Expense
Interest Expense
Total
S
$
Debit
Balance
2,600
12,800
31,200
6,800
42,400
45,500
Credit
13,600
9,500
500
8,500
22,050
239,000
107,550
27,700
14,100
2,500
293,150 $ 293,150
X
Chapter 3 Solutions
Survey Of Accounting
Ch. 3 - 1. Define merchandise inventory. What types of...Ch. 3 - 2. What is the difference between a product cost...Ch. 3 - 3. How is the cost of goods available for sale...Ch. 3 - 4. What portion of cost of goods available for...Ch. 3 - 5. When are period costs expensed? When are...Ch. 3 - 6. If PetCo had net sales of 600,000, goods...Ch. 3 - Prob. 7QCh. 3 - 8. What are the effects of the following types of...Ch. 3 - 9. Northern Merchandising Company sold inventory...Ch. 3 - 10. If goods are shipped FOB shipping point, which...
Ch. 3 - 11. Define transportation-in. Is it a product or a...Ch. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - 14. Dyer Department Store purchased goods with the...Ch. 3 - 15. Eastern Discount Stores incurred a 5,000 cash...Ch. 3 - 16. What is the purpose of giving credit terms to...Ch. 3 - Prob. 17QCh. 3 - 18. Ball Co. purchased inventory with a list price...Ch. 3 - 22. Explain the difference between purchase...Ch. 3 - Prob. 20QCh. 3 - Prob. 21QCh. 3 - 25. What is the advantage of using common size...Ch. 3 - 27. What is the purpose of preparing a schedule of...Ch. 3 - 28. Explain how the periodic inventory system...Ch. 3 - Prob. 25QCh. 3 - Exercise 3-1 Determining the cost of financing...Ch. 3 - Exercise 3-2 Comparing a merchandising company...Ch. 3 - Exercise 3-3 Effect of inventory transactions on...Ch. 3 - Exercise 3-4 Effect of inventory transactions on...Ch. 3 - Exercise 3-5 Recording inventory transactions in a...Ch. 3 - Exercise 4-6A Understanding the freight terms FOB...Ch. 3 - Exercise 3-7 Effect of purchase returns and...Ch. 3 - Exercise 3-8 Accounting for product costs:...Ch. 3 - Effect of product cost and period cost: Horizontal...Ch. 3 - Cash Discounts and Purchase Returns On April 6,...Ch. 3 - Exercise 4-9A Determining the effect of inventory...Ch. 3 - Inventory financing costs Bill Norman comes to you...Ch. 3 - Effect of shrinkage: Perpetual system Ho Designs...Ch. 3 - Comparing gross margin and gain on sale of land...Ch. 3 - Single-step and multistep income statements The...Ch. 3 - Prob. 16ECh. 3 - Effect of cash discounts on financial statements:...Ch. 3 - Using common size statements and ratios to make...Ch. 3 - Prob. 19ECh. 3 - Determining cost of goods sold: Periodic system...Ch. 3 - Identifying product and period costs Required...Ch. 3 - Problem 4-23A Identifying freight costs Required...Ch. 3 - Effect of purchase returns and allowances and...Ch. 3 - Preparing a schedule of cost of goods sold and...Ch. 3 - Prob. 25PCh. 3 - Comprehensive cycle problem: Perpetual system At...Ch. 3 - Prob. 27PCh. 3 - Comprehensive cycle problem: Periodic system...Ch. 3 - Prob. 1ATCCh. 3 - ATC 3-2 Group Exercise Multistep income statement...Ch. 3 - Prob. 3ATCCh. 3 - Prob. 4ATC
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