Question

1.) Purchase-Related Transactions

Warwick’s Co., a women's clothing store, purchased $23,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. Warwick’s returned $3,500 of the merchandise, receiving a credit memo, and then paid the amount due within the discount period.

a. Journalize Warwick’s Co.'s entry to record the purchase.

b. Journalize Warwick’s Co.'s entry to record the merchandise return.

c. Journalize Warwick’s Co.'s entry to record the payment.

2.)

Purchase-Related Transactions

Journalize entries for the following related transactions of Manville Heating & Air Company:

a. Purchased $30,000 of merchandise from Wright Co. on account, terms 2/10, n/30.

b. Paid the amount owed on the invoice within the discount period.

c. Discovered that $6,000 of the merchandise purchased in (a) was defective and returned items, receiving credit.

d. Purchased $4,800 of merchandise from Wright Co. on account, terms n/30.

e. Received a refund from Wright Co. for return in (c) less the purchase in (d).

3.)

Determining Amounts to be Paid on Invoices

Determine the amount to be paid in full settlement of each of the following invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period:

	Merchandise		Freight Paid by Seller				Customer Returns and Allowances
a.	$17,800		-			FOB destination, n/30	$900
b.	11,900		$500			FOB shipping point, 1/10, n/30	1,400
c.	8,100		-			FOB shipping point, 2/10, n/30	700
d.	4,100		200			FOB shipping point, 2/10, n/30	600
e.	2,900		-			FOB destination, 2/10, n/30	-

a. $

b. $

c. $

d. $

e. $

4.) Multiple-Step Income Statement

On March 31, 2019, the balances of the accounts appearing in the ledger of Racine Furnishings Company, a furniture wholesaler, are as follows:

Accumulated Depreciation—Building	$720,050		Merchandise Inventory	$995,450
Administrative Expenses	531,700		Notes Payable	239,150
Building	2,477,900		Office Supplies	20,450
Cash	173,700		Salaries Payable	7,750
Cost of Merchandise Sold	3,899,900		Sales	6,607,800
Interest Expense	9,950		Selling Expenses	735,850
Kathy Melman, Capital	1,644,800		Store Supplies	88,650
Kathy Melman, Drawing	171,750

a. Prepare a multiple-step income statement for the year ended March 31, 2019.

Racine Furnishings Company
Income Statement
For the Year Ended March 31, 2019
		$
Gross profit		$
Expenses:
	$
Total expenses
		$
Other expense:
		$

b. What is a major advantage of the multiple-step income statement over the single-step income statement?

5.) Determining Amounts for Items Omitted from Income Statement

One item is omitted in each of the following four lists of income statement data.

Sales	$456,000	(b)	$1,239,000	(d)
Cost of merchandise sold	(a)	$329,700	(c)	$437,875
Gross profit	83,610	84,270	464,000	123,965

Determine the missing amount.

a.	$
b.	$
c.	$
d.	$

Answer 1

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