Wily Homework Help

Wizard Industries purchased $11,500 of merchandise on February 1, 2012, subject to a trade discount of 9% and with credit terms of 3/15, n/60. It returned $3,800 (gross price before trade or cash discount) on February 4. The invoice was paid on February 13. (a) Assuming that Wizard uses the perpetual method for recording merchandise transactions, record the purchase, return, and payment using the gross method. (Round answers to 0 decimal places, e.g. $6,578. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(b) Assuming that Wizard uses the periodic method for recording merchandise transactions, record the purchase, return, and payment using the gross method. (Round answers to 0 decimal places, e.g. $6,578. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(c) At what amount would the purchase on February 1 be recorded if the net method were used? (Round answers to 0 decimal places, e.g. $6,578.)

Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was $221,650 at both cost and market value. At December 31, 2013, the inventory was $285,680 at cost and $255,570 at market value. Prepare the necessary December 31 entry under (a) the cost-of-goods-sold method (b) Loss method. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Larsen Realty Corporation purchased a tract of unimproved land for $54,000. This land was improved and subdivided into building lots at an additional cost of $28,000. These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follow.

Operating expenses for the year allocated to this project total $15,400. Lots unsold at the year-end were as follows.

At the end of the fiscal year Larsen Realty Corporation instructs you to arrive at the net income realized on this operation to date. (Round ratios for computational purposes to 1 decimal place, e.g 78.7% and final answers to 0 decimal places, e.g. $5,845.)

Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.

(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.

(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.