Solved by verified expert :Accounting Principles I – Online
Exam – Part II
Complete the following exam and save this file on your
hard drive. Then submit your file to
your instructor on Canvas.
NAME_____
PART A (26 Points)
Use the general journal below
to record the following transactions for the Linn Wholesale Company. Linn
Wholesale uses a perpetual inventory system. Linn’s cost of all
merchandise sold was 60% of the sales price.
Mar. 2 Purchased $1,100 in
merchandise on account from Sac Supply; terms 2/10, N/30.
Mar. 4 Found $300 of the
merchandise from Sac Supply to be defective and returned it for credit.
Mar. 8 Sold merchandise on
account to Strib Company in the amount of $1,500; terms 2/10, N/30.
Mar. 9 Purchased merchandise
on account from Ander Company at an invoice price of $2,200; terms 2/10, N/30.
Mar. 10 Paid the freight company
their freight bill of $75 on a shipment received.
Mar. 11 Paid Sac Supply the amount
due on March 2, invoice. (Don’t forget the return on Mar 4.)
Mar. 15 Sold merchandise on account
to Exiter Company in the amount of $700, terms 2/10, N/30.
Mar. 24 Received check from Exiter
for the amount due on the March 15 sale.
Mar. 30 Paid Ander Company amount
due on March 9 purchase.
Mar. 31 Received check for amount
due from Strib Company for March 8 sale.
Linn
Wholesale Company – General Journal
Date
Account Title
Dr
Cr
PART
B
(12 Points, 4 points each)
The following information is available for Miley Company.
Administrative Expenses
$30,000
Cost of Goods Sold
$245,000
Sales
$350,000
Sales Returns and Allowances
$10,000
Selling Expenses
$50,000
Compute the following (show all your work):
a. Net Sales
__________________________________________________________
b. Gross Profit ________________________________________________________
c. Income from operations _______________________________________________
PART C (24 Points, 4 points each)
The beginning inventory
balance of boodles on August 1 and the purchases of boodles during Augustwere as follows:
August 1 Beginning Inventory
600 units @ $4.00
$2,400
August 9 Purchase
900 units @ $5.00
$4,500
August 23 Purchase
500 units @ $6.00
$3,000
Totals
2,000 units
$9,900
At August 31, the ending
inventory was 700 units. Using the periodic inventory system,
determine both
ending inventory and the cost of
goods sold based on
each of the following methods of inventory
valuation. (Show
Computations)
Ending Inventory Cost of Goods Sold
a. First-in, first-out
(FIFO)………………… $______________ $_______________
b. Last-in, first-out
(LIFO)…………………$______________ $________________
c. Weighted Average
Cost………………….$______________ $________________
PART D(30 Points, 3 points each)
For each of the following
transactions indicate the journal which should be used by placing the
appropriate symbol in the space provided: SJ = Sales Journal, PJ = Purchase Journal, CR = Cash Receipts Journal, CP = Cash
Payments Journal,
GJ = General Journal.
A. Sold merchandise on
credit……………………………………………….______
B. Returned merchandise to
supplier for credit…………………………______
C. Purchased merchandise on
credit……………………………………….______
D. Purchased equipment used in
the business on credit…………….______
E. Purchased merchandise for
cash………………………………………..______
F. Collected accounts
receivable and allowed a cash discount…..______
G. Made an adjusting entry to
accrue salaries at end of month…..______
H. Sold merchandise for
cash………………………………………………..______
I. Recorded depreciation for the
period…………………………………______
J. Paid employees monthly
salaries……………………………………….______
PART E (10 Points)
Ron Carter is a new accountant
with Quartz Company. Quartz Company purchased merchandise onaccount for $4,000. The credit terms are 2/10,
N/30. Ron has talked with the company’s banker andlearned that the company could earn 10% on any money
invested in the company’s savings account. Should
Ron pay the invoice within the discount period, or should he keep the $4,000 in
the savingsaccount and pay at the end of the credit period? Write
a memo to Ron with your recommendation and support
your recommendation with a calculation showing which action would be
best. (Remember that bank interest rates are always stated in yearly
terms.)
MEMO
TO:
FROM:
SUBJECT:
DATE:
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