Basic Accounting

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Exercise 5-2

Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred.

Sept. 6		Purchased calculators from Dragoo Co. at a total cost of $1,690, terms n/30.
9		Paid freight of $50 on calculators purchased from Dragoo Co.
10		Returned calculators to Dragoo Co. for $64 credit because they did not meet specifications.
12		Sold calculators costing $510 for $760 to Fryer Book Store, terms n/30.
14		Granted credit of $35 to Fryer Book Store for the return of one calculator that was not ordered. The calculator cost $23.
20		Sold calculators costing $680 for $850 to Heasley Card Shop, terms n/30.

Journalize the September transactions. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit








	(To record credit sales)




	(To record credit granted for returned goods)




	(To record sales)

			· ·

Exercise 5-4

On June 10, Sunland Company purchased $6,700 of merchandise from Blossom Company, terms 2/10, n/30. Sunland Company pays the freight costs of $380 on June 11. Goods totaling $700 are returned to Blossom Company for credit on June 12. On June 19, Sunland Company pays Blossom Company in full, less the purchase discount. Both companies use a perpetual inventory system.

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Prepare separate entries for each transaction on the books of Sunland Company. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit

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Show List of Accounts

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Prepare separate entries for each transaction for Blossom Company. The merchandise purchased by Sunland Company on June 10 cost Blossom Company $2,870, and the goods returned cost Blossom Company $240. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit


	(To record credit sale)


	(To record cost of goods sold)




	(To record credit sale)


	(To record cost of goods returned)
June 19

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Exercise 5-10

In its income statement for the year ended December 31, 2017, Marin Inc. reported the following condensed data.

Operating expenses	$ 899,000	Interest revenue	$ 40,920
Cost of goods sold	1,557,440	Loss on disposal of plant assets	21,080
Interest expense	86,800	Net sales	2,728,000
Income tax expense	58,280	Other comprehensive income (net of $1,490 tax)	10,290

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Prepare an income statement.

MARIN INC. Income Statement
				$












				$

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Show List of Accounts
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Prepare a comprehensive income statement.

MARIN INC. Comprehensive Income Statement
		$

		$

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Exercise 6-5

Monty Corp. uses a periodic inventory system. Its records show the following for the month of May, in which 74 units were sold.

Date	Explanation	Units	Unit Cost	Total Cost
May 1	Inventory	32	$8	$256
15	Purchase	23	9	207
24	Purchase	37	10	370
	Total	92		$833

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Calculate the weighted-average unit cost. (Round answer to 3 decimal places, e.g. 5.125.)

Weighted-average unit cost

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Calculate the ending inventory at May 31 using the FIFO, LIFO and average-cost methods. (Round answers to 0 decimal places, e.g. 125.)

FIFO

LIFO

AVERAGE-COST

The ending inventory at May 31

Exercise 6-10

Headlands Industries sells coffee beans, which are sensitive to price fluctuations. The following inventory information is available for this product at December 31, 2017:

Coffee Bean	Units	Unit Cost Market	Market
Coffea arabica	12,100 bags	$5.50	$5.46
Coffea robusta	5,200 bags	3.40	3.50

Calculate Tascon’s inventory by applying the lower-of-cost-or-market basis.

Tascon’s inventory