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# Prepare the journal entries for the following transactions occuring in March for

## Perfect Purses, Inc.

1-Mar Purchased 20 handbags at \$50 each from Purse Distributors with terms 2/10, n/30.
Accounts
inventory
accounts payable

Debit
Credit
\$ 1,000
\$ 1,000

1-Mar Paid \$100 for freight of purses bought from Purse Distributors.
Accounts
inventory
cash

Debit
\$
100

Credit
\$

100

## 5-Mar Returned 2 defective purses to Purse Distributors

Accounts
accounts payable
inventory

Debit
\$
100

Credit
\$

100

7-Mar Sold 4 purses for \$80 each for cash. Purses had a cost of \$50 each.
Accounts
cash

Debit
\$
320

sales revenue
Accounts
cost of goods sold
inventory

Credit
\$

Debit
\$
200

320

Credit
\$

200

## 9-Mar Paid Purse Distributors balance due.

Accounts

Debit

4x8=320

Credit

4x50=200

10-Mar Sold 8 purses to Fashions, Etc. for \$80 each on account with terms 1/10, n/30. Purses had a
cost of \$50 each.
Accounts
accts recv
sales revenue
<To record the sale>

Debit
\$
640

Credit
\$

1000-100=900
.02x900=18
900-28=882

640

Accounts
Debit
Credit
cost of goods sold
\$
400
inventory
\$
400
<To record the costs related to the sale>

8x80=640

8x50=400

11-Mar Granted Fashions, Etc a \$20 allowance due to purses not meeting customer expectations.

Accounts
Debit
sales returns and allowances\$
20
accts recv

Credit
\$

20

## 14-Mar Received balance due from Fashions Etc.

Accounts
cash
sales discount
accts recv

Debit
\$ 613.80
\$
6.20

Credit

640-20=620
620x.01=6.20
620-6.20=613.80

\$ 620.00

Based on the above transactions, determine the Gross Profit for the month of March
for Perfect Purses.

Sales
Less: Sales Returns and Allowances
Less: Sales Discounts
Net Sales

## Cost of Goods Sold

Gross Profit

960.00
20.00
6.20
933.80
600.00

333.80

960-20-6.20=933.80

## Sports Warehouse had the following information related to its

inventory of footballs for the year 2012:

Date
Beg. Balance
2/15 purchase
9/1 purchase
Sales during the year

Units
50
60
70

Cost /Price
\$12
\$15
\$17

100

\$25

Total Cost
\$600
\$900
\$1,190
2500

## Determine Cost of Goods Available For Sale

180 units
2690= 600+900+1190=cogs

## Determine Ending Inventory and Cost of Goods Sold assuming the

FIFO method is used.

600+750=1350 cogs
2690-1350=1340 end inventory

Determine Ending Inventory and Cost of Goods Sold assuming the LIFO
method is used.

2690-1640=1050

## Determine Ending Inventory and Cost of Goods Sold assuming the

Average Cost method is used.

## ge cost=cost of goods availiable/# of units avaliable

2690/180=4.94

Assuming the FIFO method is used, what is the gross profit for the
year?

## sales revenue 2500

COGS 1390
2500-1390= 1150 gross profit

## Tiger Tail Company's accountant prepared the following single

step income statement for the year ended December 31,
2012. The company owner reviewed it and requested that the
accountant prepare the statement using the multipe step
format so that the components of net income could be
analyzed better.
Using the information from the single step income statement
below, prepare a multiple step income statement.

## Tiger Tail Company

Income Statement
For the year ended December 31, 2012
Revenues
Net Sales
Interest Revenue
Gain on Sale of Equipment
Total Revenues

Expenses
Cost of Goods Sold
Salaries Expense
Selling Expenses
Depreciation Expense
Income Tax Expense
Interest Expense
Freight Out
Total Expenses
Net Income

1,000,000
10,000
5,000
1,015,000

600,000
100,000
70,000
40,000
30,000
25,000
13,000
12,000
5,000
895,000
\$

120,000

## Tiger Tail Company

Income Statement
For the year ended December 31, 2012

Fleur de Lis Home Decorators sells interior design services on account. They started the year with
\$15,000 in Accounts Receivable and an Allowance for Doubtful Accounts of \$500.
Prepare journal entries for the following transactions for Fleur de Lis.

Accounts
accts recv
sales revenue

Debit
Credit
\$ 60,000
\$ 60,000

## Collection of \$50,000 were received during the year.

Accounts
cash
accts recv

Debit
Credit
\$ 50,000
\$ 50,000

Specific customer accounts totaling \$800 were written off during the year.

Accounts
Debit
Credit
allowance for doubtful accts \$
800
accts recv
\$
800
Post the entries in the Accounts Receivable and Allowance for Doubtful Accounts T's provided
below.
Allowance for
Doubtful Accounts

Accounts Receivable
Beg
15,000
60,000
50,000
800
24,200

500 Beg
800

300

Assuming that Fleur de Lis anticipates that 5% of Accounts Receivable will prove uncollectible,
what is the necessary adjusting entry to make?

Accounts
Debit
Credit
\$ 1,510
allowance for doubtful
\$ 1,510

24200x.05=1210
1210+300=1510

Show the balance sheet presentation of Accounts Receivable on the year end balance sheet?

accts recv

24200

## less:allowance for doubtful

net accounts recv

1210
22900

1210+300=1510

On September 1, 2012 Tiger Company borrowed money from First State Bank by signing a \$10,000,
8%, 6 month note. First State Bank prepares annual financial statements on December 31.
Complete the necessary journal entries for First State Bank .
Entries for First State Bank (Lender)
9/1/2012

Accounts
notes recv
cash

Debit
Credit
\$ 10,000
\$ 10,000

12/31/2012

Accounts
intererst recv
interest revenue

Debit
Credit
\$
267
\$
267

10000x.08x4/12=267

Accounts
cash
notes recv
intterest recv
interest revenue

Debit
Credit
\$ 10,400
\$ 10,000
\$
267
\$
133

10000x.08x6/12=10400

## Prepare a June 30th bank reconciliation for Justice Company based on

the following facts:
The bank statement shows a balance of \$16,233 on June 30.
The general ledger shows a balance of \$17,500 on June 30.
The bank statement shows \$20 of interest was earned on the account in June.
The daily deposit on June 30th of \$2,500 was not shown on the bank statement.
The bank statement shows a debit memo of \$75 for the return of a customer's check as NSF.
Outstanding checks total \$1,277.
While looking at the cleared checks, the bookkeeper noticed that check #355 correctly cleared for \$215.
When originally recorded, the check was posted.
8. The bank statement showed a \$25 fee for failure to maintain the required minimum balance in the
account during the month.
1.
2.
3.
4.
5.
6.
7.

Justice Company
Bank Reconciliation
June 30
Bank Balance

16233
deposits in transit

2500

Less:

outstanding checks

1277

Book Balance
Less:

\$17,456

17500
interest earned
correction check
NSF Check
bank fee

20
36
75
25

\$17,456

## Prepare the necessary entries for Justice Company based

on the bank reconciliation.
Accounts
Cash
Inerest revenue

Debit

Credit
\$20
\$20

Cash
accts payable

\$36

accts Recv
cash

\$75

Misc Exp
cash

\$25

\$36

\$75

\$25