Excel Applications for Accounting Principles
4th Edition
ISBN: 9781111581565
Author: Gaylord N. Smith
Publisher: Cengage Learning
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Textbook Question
Chapter 8, Problem 1R
On September 30, 2013, the general ledger of Leonʼs Golf Shop, which uses the calendar year as its accounting period, showed the following year-to-date account balances:
The merchandise inventory account had a $48,000 balance on January 1, 2013. The historical gross profit percentage is 40%.
Leon prepares quarterly financial statements and takes physical inventory once a year–at the end of the accounting period. In order to prepare the financial statements for the third quarter, the store needs to have an estimate of ending inventory. You have been asked to use the gross profit method to estimate the ending inventory. Review the worksheet called GP. Study it carefully because it may have a solution format somewhat different from the one shown in your textbook.
Expert Solution & Answer
To determine
Compute the ending inventory using the gross profit method.
Explanation of Solution
Compute the ending inventory using the gross profit method:
Table (1)
The formulae used in the table are given below:
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Students have asked these similar questions
Vigeland Company completed the following transactions during Year 1. Vigeland’s fiscal year ends on December 31.
January 15
Purchased and paid for merchandise. The invoice amount was $15,200; assume a perpetual inventory system.
April 1
Borrowed $774,000 from Summit Bank for general use; signed a 10-month, 9% annual interest-bearing note for the money.
June 14
Received a $24,000 customer deposit for services to be performed in the future.
July 15
Performed $3,450 of the services paid for on June 14.
December 12
Received electric bill for $26,160. Vigeland plans to pay the bill in early January.
December 31
Determined wages of $15,000 were earned but not yet paid on December 31 (disregard payroll taxes).
Required:
Prepare journal entries for each of these transactions.
Prepare the adjusting entries required on December 31.
Roger Company completed the following transactions during Year 1. Roger's fiscal year ends on December 31.
Jan. 8 Purchased merchandise for resale on account. The invoice amount was $14,860; assume
17 Paid January 8 invoice.
Apr. 1 Borrowed $35,000 from National Bank for general use; signed a 12-month, 8% annual interest-bearing note for the
a perpetual inventory system.
money.
June 3 Purchased merchandise for resale on account. The invoice amount was $17,420.
July 5 Paid June 3 invoice.
Aug. 1 Rented office space in one of Roger's buildings to another company and collected six months' rent in advance
amounting to $6,000.
Dec.20 Received a $100 deposit from a customer as
31 Determined wages of $9,500 were earned but not yet paid on December 31 (disregard payroll taxes).
a guarantee to return a trailer borrowed for 30 days.
Required:
1. For each transaction (including adjusting entries on December 31), indicate the effects (e.g., Cash + or -), using the following
schedule: (Indicate the…
Roger Company completed the following transactions during Year 1. Roger’s fiscal year ends on December 31.
Jan.
8
Purchased merchandise for resale on account. The invoice amount was $14,780; assume a perpetual inventory system.
17
Paid January 8 invoice.
Apr.
1
Borrowed $54,000 from National Bank for general use; signed a 12-month, 10% annual interest-bearing note for the money.
June
3
Purchased merchandise for resale on account. The invoice amount was $17,420.
July
5
Paid June 3 invoice.
Aug.
1
Rented office space in one of Roger’s buildings to another company and collected six months’ rent in advance amounting to $6,000.
Dec.
20
Received a $180 deposit from a customer as a guarantee to return a trailer borrowed for 30 days.
31
Determined wages of $9,200 were earned but not yet paid on December 31 (disregard payroll taxes).
Show how all of the liabilities arising from these transactions are reported on the balance sheet at December 31.…
Chapter 8 Solutions
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