Introduction:
To record: The journal entries.
1.
2.
To prepare: Journalising and posting the adjustment entries in their respective ledgers
Introduction: Journal entry is the first step of accounting to record day-to-day transactions that a business performs. It helps in further preparing financial statements at the end of the period to assess the financial position of the business.
3.
To prepare: Single-step Income Statement
Introduction: The financial statements of a company include the balance sheet, income statement, and
1.
To prepare: Journal entry, Ledgers, Post-closing
Introduction: Journal entry is the first step of accounting to record day-to-day transactions that a business performs. It helps in further preparing financial statements at the end of the period to assess the financial position of the business.
5.
To prepare: Calculation of Gross profit percentage
Introduction: Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. Gross profit will appear on a company's income statement and can be calculated by subtracting the cost of goods sold (COGS) from revenue (sales).
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HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT
- The following information is from Dessert Dynasty. The company runs three stores and the December Income Statement for all stores is shown. A. Find the missing values for retail revenue, ingredients, and operating income. B. Comment on the financial performance of each store. C. Identify a limitation of analyzing the information provided. You may want to consider using Microsoft Excel or another spreadsheet application for the numerical data. This information will be used in a subsequent question.arrow_forwardYou are the bookkeeper at a small merchandising firm. You are comparing the income statements from the last three years. You notice that the Purchases Returns and Allowances account (as a percentage of net sales) has been increasing at an alarming rate. If you were a manager, to whom would you speak in the organization to help you understand why so much merchandise is being returned? What types of questions would you ask?arrow_forwardSeas Beginning sells clothing by mail order. An important question is when to strike a customer from the company’s mailing list. At present, the company strikes a customer from its mailing list if a customer fails to order from six consecutive catalogs. The company wants to know whether striking a customer from its list after a customer fails to order from four consecutive catalogs results in a higher profit per customer. The following data are available: ■ If a customer placed an order the last time she received a catalog, then there is a 20% chance she will order from the next catalog. ■ If a customer last placed an order one catalog ago, there is a 16% chance she will order from the next catalog she receives. ■ If a customer last placed an order two catalogs ago, there is a 12% chance she will order from the next catalog she receives. ■ If a customer last placed an order three catalogs ago, there is an 8% chance she will order from the next…arrow_forward
- 1. Identifying alternative accounting treatments: A new restaurant is opening in one month, and the manager will be holding a one-week intensive training session for new employees. Describe two possible accounting methods for accounting for the costs of training the employees. Codification research is not required for this exercise; your goal on this exercise is just to brainstorm. 2. Identify at least one researchable question for the following issue:A vendor ships goods to a customer on credit but does not have previous credit experience with this customer. 3. Identify at least one researchable question for the following issue:A cable network has just entered into an agreement granting it the right to show reruns of a hit TV series. In exchange for this right, the network must pay the TV show’s creators a fee each time the show airs. 4. The six decision traps and biases are not an all-inclusive list. Perform an Internet search for one other bias that you believe could be applicable…arrow_forwardKaren's retail store sells apparel. The store is in the third year of operations and is struggling financially. Part of the problem is that the cost of inventory has increased. The store assigns inventory costs using LIFO. A loan agreement with the bank requires the store to maintain a certain profit margin. Karen is reviewing the current year financial statements and sees that results are not favorable. The only way that the store can meet the required profit margin is to change inventory costing from LIFO to FIFO. Karen redoes the financial statements using FIFO and submits them to the bank without disclosing the change. How is it that FIFO improves the profit of the store? Did Karen make a good ethical choice by changing to FIFO? Why or why not? What alternatives did Karen have in this situation?arrow_forwardQuestion: The manager of your company told you to go out to the warehouse and count merchandise inventory. He said that owner is coming for a meeting next week and the manager wanted to put on a good show. He asked you to make the inventory higher by counting the first and last row twice. The higher ending inventory will result in higher net profit. What should you do?arrow_forward
- I'm having trouble with the following problem from Cengage. I’m getting error messages in the journalizing for Summit Company. Included are the instructions and screenshots of my results. Please help. The following selected transactions were completed during August between Summit Companyy and Beartooth Co. Aug 1 Summit Company sold merchandise on account to Beartooth Co., $48,000, term FOB Destination, 2/15, n/eom. The cost of the goods sold was $28,800. 2 Summit Company paid freight of $1,150 for delivery of merchandise sold to Beartooth Co. on August 1. 5 Summit Company sold merchandise on account to Beartooth Co., $66,000, terms FOB shipping point, n/eom. The cost of the goods sold was $40,000. 9 Beartooth Co. Paid freight of $2,300 on August 5 purchase from Summit Company. 15 Summit Company sold merchandise on account to Beartooth Co., $58,700, terms FOB shipping point, n/45. Summit paid freight of $1,675 which was added to the…arrow_forwardAt the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he’s collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured. Data for February Decrease in materials inventory $2,700 Materials inventory on Feb. 28 50% of materials inventory on Jan. 31 Direct materials purchased $12,300 Direct materials used 3 times the direct labor incurred Total manufacturing costs incurred in period $29,400 Total manufacturing costs incurred in period 70% of Cost of Goods Manufactured Total manufacturing costs incurred in…arrow_forward1. You are a recent graduate and you are working in the accounting department of Macy’s. Next week, you are required to attend an inventory meeting for the store located in a local mall. You know this store well because you shop there frequently. One of the managers of the store feels that the men’s shoe department is unprofitable because the selection is poor, there are few sizes available, and there just aren’t enough shoes. The manager is pushing for a very large shoe inventory to make the department more desirable to shoppers and therefore more profitable. Explain why it is good or bad to have a large inventory of shoes. 2. Do the terms LIFO, FIFO, and Weighted Average have anything to do with the actual physical flow of the items in inventory? Please explain.arrow_forward
- In October, Nicole of Nicole's Getaway Spa (NGS) eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each produ line had exceeded the profits eamed. In December, a supplier asked her to sell a prepackaged spa kit. Feeling she could manage a single product line Nicole agreed. NGS would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. The spa would use a perpetual inventory system to keep track of its new inventory. On December 31, NGS purchased 10 units at a total cost of $6.00 per unit. NGS purchased 30 more units at $8.00 in February, but returned 5. defective units to the supplier. In March, NGS purchased 15 units at $10.00 per unit. In May, 50 units were purchased at $10.00 per unit; however took advantage of a 2.00/10, n/30 discount from the supplier. In June, NGS sold 50 units at a selling price of $12.60 per unit and 35 units at $10.60 pe unit. Required: 1. State whether the…arrow_forwardComplete the following table, indicating the amount and direction of effect of each transaction on each item in Rockland Shoe Company's income statement. Be sure to compute the total effects in the final column. Rockland allows returns within only two weeks of the initial sale. (Enter any decreases to account balances with a minus sign.) July 12 Rockland sold merchandise to Kristina Zee at its factory, store. Kristina paid for the $355 purchase in cash. The goods cost Rockland $205. July 15 Sold merchandise to Shoe Express at a selling price of $8,500, with terms n/30. Rockland's cost was $4,500. July 23 Shoe Express returned $2,100 of the shoes purchased July 15. The returned shoes were in perfect condition and had cost Rockland $1,150. July 31 Shoe Express paid the balance owing after the events on July 15 and 23.arrow_forwardTri-State Bank and Trust is considering giving Swifty Company a loan. Before doing so, management decides that further discussions with Swifty's accountant may be desirable. One area of particular concern is the inventory account, which has a year-end balance of $310,000. Discussions with the accountant reveal the following. 1. 2. 3. 4. 5. Swifty shipped goods costing $36,000 to Lilja Company, FOB shipping point, on December 28. The goods are not expected to arrive at Lilja until January 12. The goods were not included in the physical inventory because they were not in the warehouse. The physical count of the inventory did not include goods costing $92,000 that were shipped to Swifty FOB destination on December 27 and were still in transit at year-end. Swifty received goods costing $20,000 on January 2. The goods were shipped FOB shipping point on December 26 by Brent Co. The goods were not included in the physical count. Swifty shipped goods costing $35,000 to Jesse Co., FOB…arrow_forward
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