Merchandising Operations app5

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Chapter 5

1

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.2

Prepare worksheets for a merchandiser


Similar to the worksheet for a service businessNew accounts

InventorySales revenueCost of goods sold

Procedures are the same as for a service business


Beach Day Coolers’ trial balance as of December 31, 2012 is provided.

1.Complete the accounting worksheet for the year ended December 31, 2012. Key adjusting entries by letter.2.Prepare the multi-step income statement, statement of owner’s equity, and balance sheet for the year.3.Prepare closing entries for the year.


TRIAL BALANCE ADJUSTMENTS

ADJUSTEDTRIAL

BALANCEINCOME

STATEMENTBALANCE

SHEET

ACCOUNT TITLE DEBITCREDI

TDEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT

Cash $2,800 $2,800 $2,800Accounts receivable 10,300 10,300 10,300Inventory 72,000 (d)

3,50068,500 68,500

Prepaid rent 3,600 (a) 2,100 1,500 1,500Equipment 23,900 23,900 23,900Accumulated depreciation

$7,000 (b) 4,900

$11,900 $11,900

Accounts payable 9,600 9,600 9,600Salary payable 0 (c) 1,200 1,200 1,200Note payable, long-term 20,400 20,400 20,400Common Stock 9,900 9,900 9,900Retained earnings 48,500 48,500 48,500Dividends 36,600 36,600 36,600Sales revenue 191,000 191,000 $191,000Cost of goods sold 66,000 (d) 3,500 69,500 $69,500Salary expense 46,700 (c) 1,200 47,900 47,900Rent expense 14,300 (a) 2,100 16,400 16,400Utilities expense 6,800 6,800 6,800Depreciation expense 0 (b) 4,900 4,900 4,900Interest expense 3,400 3,400 3,400

$286,400 $286,400 $11,700 $11,700 $292,500 $292,500 $148,900 $191,000 $143,600 $101,500

Net income $42,100 $42,100

$191,000 $191,000 $143,600 $143,600


Beach Day Coolers, Inc.Income Statement

Year Ended December 31, 2012Revenue:Sales revenue $191,000Cost of goods sold _ 69,500Gross profit $ 121,500Operating expenses:

Salary expense $47,900 Rent expense 16,400 Utilities expense 6,800 Depreciation expense _4,900 _76,000Operating income 45,500Other revenue (expenses): Interest expense 3,400 __(3,400)Net income $ 42,100


Beach Day Coolers, Inc.

Statement of Retained Earnings

Year Ended December 31, 2012

Retained earnings, January 1, 2012 $ 48,500

Net income 42,100

90,600

Dividends (36,600)

Retained earnings, December 31, 2012 $54,000


Beach Day Coolers, Inc. Balance Sheet

December 31, 2012Assets

Current assets:Cash $ 2,800

Accounts receivable 10,300 Inventory 68,500

Prepaid rent __1,500Total current assets 83,100

Plant assets:Equipment $23,900Less: Accumulated depreciation 11,900 _12,000

Total assets $95,100Liabilities

Current liabilities:Accounts payable $ 9,600Salary payable _1,200

Total current liabilities 10,800

Long-term liabilities:Note payable, long-term 20,400

Total liabilities $ 31,200Stockholders' Equity

Common stock 9,900Retained earnings _54,000Total stockholders’ equity _63,900Total liabilities and stockholders’ equity $95,100


Dec 31 Sales revenue 191,000Income summary 191,000

31 Income summary 148,900Cost of goods sold 69,500

Salary expense 47,900 Rent expense 16,400 Utilities expense 6,800

Interest expense 3,400Depreciation

expense4,900

31 Income summary($191,000 − $148,900) 42,100

Retained earnings 42,100

31 Retained earnings 36,600Dividends 36,600


The worksheet of a merchandiser is similar to the worksheet for a service business. The main new account is the Inventory account, which must be adjusted based on a physical count.The merchandiser’s worksheet carries the other new merchandising accounts (Sales revenue, Cost of goods sold, etc). Worksheet procedures are the same as for a service business.

11


Copyright

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

Merchandising Operations app5

Business

Transcript of Merchandising Operations app5