Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 5, Problem 46PA
The following transactions occurred during July 2010 at Tiny’s Sports Shop:
Requirements
- 1. Suppose Tiny’s Sports Shop started the month with cash of $8,000, merchandise inventory of $2,000, and common stock of $10,000. Enter each transaction into the
accounting equation , assuming Tiny’s Sports Shop uses a perpetual inventory system. - 2. Calculate the cost of goods sold for July and the ending balance in inventory.
- 3. Prepare the multistep income statement, and the statement of changes in shareholders’ equity for the month of July, and the
balance sheet at July 31. - 4. Calculate the gross profit ratio for Tiny’s Sports Shop for July. Explain what the ratio measures.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Palm Tree Furniture began June with merchandise inventory of 48 sofas that cost a total of $36,960. During the month, Palm Tree Furniture purchased and sold merchandise on account as follows:
View the inventory_records.
Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company's Cost of Goods Sold, ending merchandise inventory, and gross profit.
Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record,
calculate the quantity and total cost of inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.)
Purchases
Cost of Goods Sold
Inventory on Hand
Unit
Total
Unit
Total
Unit
Total
Date
Quantity
Cost
Cost
Quantity
Cost
Cost
Quantity
Cost
Cost
June 1
June 7
June 14
June 18
June 27
Totals
The gross profit is
Inventory…
Requirements 1. Prepare the company's January, multistep income statement. Calculate income using the LIFO, average-cost, and FIFO methods. Label the bottom line "Operating income." Round the average cost per unit to three decimal places and all other figures to whole-dollar amounts. Show your computations. 2. Suppose you are the financial vice president of Ohio Instruments. Which inventory method will you use if your motive is to
a. minimize income taxes?
b. report the highest operating income?
c. report operating income between the extremes of FIFO and LIFO?
d. report inventory on the balance sheet at the most current cost? e. attain the best measure of net income for the income statemehi? State the reason for each of your answers.
please answer all please answer all or skip do not waste question or time by giving incomplete or incorrect answer please provide answer with explanation computation formula please answer with steps thanks
The Income Statement columns of the August 31 (year-end) work sheet for Ralley Company are shown here. To save time and space, the expenses have been grouped together into two categories.
INCOME STATEMENT
ACCOUNT NAME
DEBIT
CREDIT
Income Summary
31,100.00
31,130.00
Sales
324,360.00
Sales Returns and Allowances
13,970.00
Sales Discounts
7,620.00
Purchases
126,210.00
Purchases Returns and Allowances
1,020.00
Purchases Discounts
1,110.00
Freight In
8,460.00
Selling Expenses
61,470.00
General Expenses
51,751.00
300,581.00
357,620.00
Net Income
57,039.00
357,620.00
357,620.00
From the information given, prepare an income statement for the company.
Ralley CompanyIncome StatementFor Year Ended August 31, 20--
(See images)
Chapter 5 Solutions
Financial Accounting
Ch. 5 - In each separate situation, identify which company...Ch. 5 - Prob. 2YTCh. 5 - Prob. 3YTCh. 5 - Prob. 4YTCh. 5 - Prob. 5YTCh. 5 - Jaynes Jewelry Store purchased three diamond and...Ch. 5 - Prob. 7YTCh. 5 - Prob. 8YTCh. 5 - Prob. 9YTCh. 5 - Prob. 1Q
Ch. 5 - What is the difference between freight-in and...Ch. 5 - What is the difference between a purchase return...Ch. 5 - What is a purchase discount? What is the effect of...Ch. 5 - Prob. 5QCh. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - What is the difference between a periodic and...Ch. 5 - What is inventory shrinkage?Ch. 5 - What is the difference between the physical flow...Ch. 5 - What are the common cost flow methods for...Ch. 5 - If inventory costs are rising, which method (FIFO,...Ch. 5 - If inventory costs are rising, which method (FIFO,...Ch. 5 - Does LIFO or FIFO give the bestmost currentbalance...Ch. 5 - How do taxes affect the choice between LIFO and...Ch. 5 - Does the periodic or perpetual choice affect the...Ch. 5 - What is the lower-of-cost-or-market rule and why...Ch. 5 - What does the gross profit percentage measure? How...Ch. 5 - What does the inventory turnover ratio measure?...Ch. 5 - What are some of the risks associated with...Ch. 5 - Prob. 1MCQCh. 5 - Prob. 2MCQCh. 5 - Prob. 3MCQCh. 5 - Prob. 4MCQCh. 5 - Prob. 5MCQCh. 5 - Prob. 6MCQCh. 5 - Prob. 7MCQCh. 5 - Prob. 8MCQCh. 5 - Prob. 9MCQCh. 5 - Prob. 10MCQCh. 5 - Prob. 1SEACh. 5 - Prob. 2SEACh. 5 - Prob. 3SEACh. 5 - Prob. 4SEACh. 5 - Prob. 5SEACh. 5 - Prob. 6SEACh. 5 - Prob. 7SEACh. 5 - Prob. 8SEACh. 5 - The following information pertains to item #007SS...Ch. 5 - Prob. 10SEACh. 5 - Prob. 11SEBCh. 5 - Prob. 12SEBCh. 5 - Prob. 13SEBCh. 5 - Prob. 14SEBCh. 5 - Prob. 15SEBCh. 5 - Prob. 16SEBCh. 5 - Prob. 17SEBCh. 5 - Given the following information, calculate the...Ch. 5 - Prob. 19SEBCh. 5 - Prob. 20SEBCh. 5 - Prob. 21EACh. 5 - Prob. 22EACh. 5 - Prob. 23EACh. 5 - Prob. 24EACh. 5 - August 11Purchased four units at 400 each August...Ch. 5 - Prob. 26EACh. 5 - Prob. 27EACh. 5 - Prob. 28EACh. 5 - Prob. 29EACh. 5 - Prob. 30EACh. 5 - Given the following information, calculate the...Ch. 5 - Prob. 32EBCh. 5 - Prob. 33EBCh. 5 - Prob. 34EBCh. 5 - Prob. 35EBCh. 5 - Prob. 36EBCh. 5 - Prob. 37EBCh. 5 - Assume Radio Tech uses a perpetual inventory...Ch. 5 - Prob. 39EBCh. 5 - Prob. 40EBCh. 5 - Prob. 41EBCh. 5 - Prob. 42EBCh. 5 - Prob. 43PACh. 5 - Prob. 44PACh. 5 - Prob. 45PACh. 5 - The following transactions occurred during July...Ch. 5 - Prob. 47PACh. 5 - Prob. 48PACh. 5 - Calculate cost of goods sold and ending inventory;...Ch. 5 - Prob. 50PACh. 5 - Green Bay Cheese Company is considering changing...Ch. 5 - The following information is for Leos Solar...Ch. 5 - Prob. 53PACh. 5 - Prob. 54PBCh. 5 - Prob. 55PBCh. 5 - Prob. 56PBCh. 5 - Prob. 57PBCh. 5 - Prob. 58PBCh. 5 - Prob. 59PBCh. 5 - Calculate cost of goods sold and ending inventory;...Ch. 5 - Prob. 61PBCh. 5 - Castana Company is considering changing inventory...Ch. 5 - The following information is for Falling Numbers...Ch. 5 - Prob. 64PBCh. 5 - Prob. 1FSACh. 5 - Prob. 2FSACh. 5 - Prob. 3FSACh. 5 - Prob. 1CTPCh. 5 - Prob. 2CTP
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
- The following selected information is taken from the financial statements of Arnn Company for its most recent year of operations: During the year, Arnn had net sales of 2.45 million. The cost of goods sold was 1.3 million. Required: Note: Round all answers to two decimal places. 1. Compute the current ratio. 2. Compute the quick or acid-test ratio. 3. Compute the accounts receivable turnover ratio. 4. Compute the accounts receivable turnover in days. 5. Compute the inventory turnover ratio. 6. Compute the inventory turnover in days.arrow_forwardThe following is selected information from Orange Industries. Compute net purchases, and cost of goods sold for the month of June.arrow_forwardPalisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2016 (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 July, 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 the Balance columns opposite the closing entry. Insert the new balance in the owners capital account. 10. Prepare a post-closing trial balance.arrow_forward
- Guardian Services Inc. had the following transactions during the month of April: a. Record the June purchase transactions for Guardian Services Inc. in the following purchases journal format: b. What is the total amount posted to the accounts payable and office supplies accounts from the purchases journal for April? c. What is the April 30 balance of the Officemate Inc. creditor account assuming a zero balance on April 1?arrow_forwardLogo Gear purchased $2,250 worth of merchandise during the month, and its monthly income statement shows cost of goods sold of $2,000. What was the beginning inventory if the ending inventory was $1,000?arrow_forwardDetermining gross profit During the current year, merchandise is sold for $8,780,000. The cost of the goods sold is $5,531,400. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet a. What is the amount of the gross profit? Round your answer to the nearest dollar. b. Compute the gross profit percentage (gross profit divided by sales). Round your answer to the nearest whole number. C. Will the income statement always report a operating incomne? Yes No Previous earch 542 PM 5/3/2021arrow_forward
- Journalize the following transactions that occurred in March for Downton Company. Assume Downton uses the periodic inventory system. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Downton estimates sales returns at the end of each month. (Record debits first, then credits. Exclude explanations from journal entries. Assume the company records sales at the net amount. Round all amounts to the nearest whole dollar.) More info Mar. 3 Mar. 4 Mar. 4 Mar. 6 Mar. 8 Mar. 9 Mar. 10 Mar. 12 Mar. 13 Mar. 15 Mar. 22 Mar. 23 Mar. 25 Mar. 29 Mar. 30 Purchased merchandise inventory on account from Sherry Wholesalers, $4,000. Terms 1/15, n/EOM, FOB shipping point. Paid freight bill of $90 on March 3 purchase. Purchase merchandise inventory for cash of $1,900. Returned $1,100 of inventory from March 3 purchase. Sold merchandise inventory to Hillis Company, $2,500, on account. Terms 1/15, n/35. Purchased merchandise inventory on…arrow_forwardRecord Baker’s November transactions, including the cost of goods sold entries for each sale. Calculate the net realizable value of accounts receivable as of November 30.arrow_forwardSkysong Company's record of transactions for the month of April was as follows. (b) Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO. Purchases Sales April 1 (balance on hand) 1,800 @ $5.60 April 3 1,500 @ $10.00 4 4,500 @ 5.70 9 4,200 @ 10.00 8 2,400 @ 6.00 11 1,800 @ 11.00 Inventory $ 13 3,600 @ 6.10 21 2,100 @ 6.20 27 22 23 3,600 @ 11.00 2,700 @ 12.00 eTextbook and Media 29 1,500 @ 6.40 13,800 Save for Later 15,900 (1) FIFO $ (2) LIFO 11790 Attempts: 0 of 3 used Submit Answarrow_forward
- Assume the perpetual inventory system is used unless stated otherwise. Round all numbers to the nearest whole dollar unless stated otherwise. Journalizing purchase and sale transactions Journalize the following transactions that occurred in November 2018 for Julie’s Fun World. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Julie’s Fun World estimates sales returns at the end of each month.arrow_forwardBlossom Company provides the following information for the month ended October 31, 2022: sales on credit $280,100, cash sales $100,100, sales discounts $5,100, and sales returns and allowances $10,100.Prepare the sales section of the income statement based on this information. BLOSSOM COMPANYIncome Statement (Partial)choose the accounting period For the Year Ended October 31, 2022For the Month Ended October 31, 2022October 31, 2022 select an opening section name DrawingsExpensesNet Income / (Loss)SalesTotal ExpensesTotal RevenuesNet SalesOwner's Capital, October 1Owner's Capital, October 31Cost of Goods SoldGross Profit select an item $enter a dollar amount select between addition and deduction AddLess: select an item $enter a dollar amount select an…arrow_forwardJournalize the following sales transactions for Lucy's Boutique. Explanations are not required. The company estimates sales returns at the end of each month. (Assume the company uses a perpetual inventory system and records sales at the net amount.) (Click the icon to view the transactions.) Mar. 3: Lucy sold $63,000 of women's clothes on account, credit terms are 3/10, n/30, to Maria's Dresses. Cost of goods is $35,000. Begin by preparing the entry to journalize the sale portion of the transaction. Do not record the expense related to the sale. We will do that in the following step. Date Accounts Debit Credit Mar, 3 More Info Now journalize the expense related to the March sale-Cost of goods, $35,000. Date Accounts Debit Credit Mar. 3 Lucy sold $63,000 of women's clothes on account, credit terms are 3/10, n/30, to Maria's Dresses. Cost of goods is $35,000. Mar. 3 Lucy granted a sales allowance of $100 for the clothes sold on March 3. Maria's Dresses did not return the inventory. Mar.…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegePrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
IAS 29 Financial Reporting in Hyperinflationary Economies: Summary 2021; Author: Silvia of CPDbox;https://www.youtube.com/watch?v=55luVuTYLY8;License: Standard Youtube License