P5-8A

a) Journalizing the transactions:

Dr. Cr.
Date Particulars
$ $

1,20
April 5 Purchase A/c Dr.
0

1,20
To Accounts Payable A/c
0

(To record credit purchase, terms 2/10, n/60, FOB

shipping point)

April 7 Freight-in A/c Dr. 50

To Cash A/c 50

(To record cash payment of freight-in)

April 9 Accounts Payable A/c Dr. 100

To Purchase Returns and Allowance A/c 100

(To record credit received for merchandise returned)

April
Accounts Receivables A/c Dr. 600
10

To Sales A/c 600

(To record credit sales, terms n/30)

April
Purchases A/c Dr. 450
12

To Accounts Payable A/c 450

(To record credit purchase, terms 1/10, n/30)

April 1,10
Accounts Payable A/c Dr.
14 0

To Purchase Discount A/c ($1,100 * 2%) 22

1,07
To Cash A/c
8

(To record payment made and discount received)

April
Accounts Payables A/c Dr. 50
17

To Purchase Returns and Allowance A/c 50

(To record credit received for merchandise returned)

 Dr. Cr.
Date Particulars
$ $

April
Accounts Receivables A/c Dr. 600
20

To Sales A/c 600

(To record credit sales, terms n/30)

April
Accounts Payable A/c Dr. 400
21

To Purchase Discounts A/c (400 * 1%) 4

To Cash A/c 396

(To record cash payment and discount received)

April
Sales Returns and Allowances A/c Dr. 35
27

To Accounts Receivables A/c 35

(To record credit granted to members)

April
Cash A/c Dr. 600
30

To Accounts Receivables A/c 600

(To record cash received of credit sales)

b) T-accounts:

Cash Account

Date Particulars $ Date Particulars $

April 3,00
To Balance B/d 7 By Freight-in A/c 50
1 0

To Accounts Receivables By Accounts Payable 1,07

30 600 14
A/c A/c 8

By Accounts Payable
21 396
A/c

April 2,07
By Balance C/f
31 6

3,60 3,60
Total Total
0 0
Accounts Receivables A/c

Date Particulars $ Date Particulars $

April To Sales By Sales Returns and allowance

600 27 35
10 A/c A/c

To Sales
20 600 30 By Cash A/c 600
A/c

April
By Balance C/f 565
31

1,20 1,20
Total Total
0 0

Inventory A/c

Date Particulars $ Date Particulars $

April To Balance 4,00

1 B/d 0

April By Balance 4,00

31 C/f 0

4,00 4,00
Total Total
0 0

Accounts Payable A/c

Dat
Particulars $ Date Particulars $
e

To Purchase Returns and Allowance April By Purchase 1,20

9 100
A/c 5 A/c 0

1,07 By Purchase
14 To Cash A/c 12 450
8 A/c

14 To Purchase Discount A/c 22

To Purchase Returns and Allowance

17 50
A/c

21 To Cash A/c 396

21 To Purchase Discount A/c 4

Tot 1,65 1,65

Total
al 0 0
Owner's Capital A/c

Date Particulars $ Date Particulars $

April To Balance 7,00 April By Balance 7,00

1 C/f 0 31 C/d 0

7,00
Total Total
0

Sales A/c

Date Particulars $ Date Particulars $

April By Accounts Receivables

600
10 A/c

April To Balance 1,20 By Accounts Receivables

20 600
31 C/f 0 A/c

1,20 1,20
Total Total
0 0

Sales Return and Allowances A/c

Date Particulars $ Date Particulars $

April To Accounts Receivables 3 April By Balance 3

27 A/c 5 31 C/f 5

3 3
Total Total
5 5

Purchases A/c

Date Particulars $ Date Particulars $

April To Accounts Payable 1,20 April By Balance 1,65

5 A/c 0 31 C/f 0

To Accounts Payable
12 450
A/c

1,65 1,65
Total Total
0 0

Purchase Returns and Allowance A/c

Date Particulars $ Date Particulars $

Purchase Returns and Allowance A/c

April By Accounts Payable 10

9 A/c 0

April To Balance 15 By Accounts Payable

17 50
31 C/f 0 A/c

15 15
Total Total
0 0

Purchase Discount A/c

Dat
Particulars $ Date Particulars $
e

April By Accounts Payable 2

14 A/c 2

To Balance 2 By Accounts Payable

31 21 4
C/f 6 A/c

Tot 2 2
Total
al 6 6

Freight-in A/c

Date Particulars $ Date Particulars $

April To Cash 5 April By Balance 5

7 A/c 0 31 C/f 0

5 5
Total Total
0 0

c) Trial Balance:

Trial Balance

Debit Credit
Particulars
$ $

Cash 2,076

Accounts Receivables 565

Inventory 4,000

Owner's Capital 7,000

Sales 1,200
Trial Balance

Sales Returns and Allowances 35

Purchases 1,650

Purchase Returns and

150
Allowances

Purchase Discount 26

Freight-in 50

Total 8,376 8,376

d) Income Statement (gross profit based when Ending inventory is $4,824):

Income Statement (Gross Profit through)

Particulars $ Particulars $

4,00
Beginning Inventory Sales 1,200
0

Less: Sales Returns and 1,16

Purchase 1,650
Allowances (35) 5

4,82
Less: Purchase Discount (26) Ending Inventory
4

Less: Purchase Returns and

Allowances (150)

1,52
Add: Freight-in 50
4

Gross Profit 465

5,98 5,98
Total Total
9 9

P5-5A

Adjusting Journal Entry

Debit Credit
Date Particulars
Amount Amount

Nov- Supplies Expenses A/c Dr $4,050.00

30
To Supplies A/c $4,050.00

(Being adjusting entry for supplies

 expenses)

Depreciation A/c Dr $11,200.00

Nov- To Accumulated Depreciation -

$11,200.00
30 Equipment A/c

(Being depreciation for equipment)

Interest Expenses A/c Dr $5,540.00

Nov- To Interest Payable A/c $5,540.00

30
(Being interest accrued on notes
payable)

Ending Inventory A/c Dr $43,900.00

Nov- To Cost of Goods Sold A/c $43,900.00

30
(Being adjusting entry for ending
inventory)

Closing Entries
Debit Credit
Date Particulars
Amount Amount

Cost of Goods Sold Dr $44,400.00

Nov- To Inventory A/c $44,400.00

30
(Being opening inventory balance transfer to
Trading A/c)

Profit and Loss A/c Dr $4,050.00

Nov-
To Supplies Expenses A/c $4,050.00
30
(Being supplies expenses closed)

Sales Revenue A/c Dr $755,800.00

Nov-
To Trading A/c $755,800.00
30
(Being sales revenue a/c closed)

Trading A/c Dr $8,980.00

Nov-
To Sales Returns and Allowances A/c $8,980.00
30
(Being sales returns and allowances a/c closed)

Nov- Trading A/c Dr $497,200.00

30
To Cost of Goods Sold A/c $497,200.00
 (Being cost of goods sold a/c closed)

Profit and Loss A/c Dr $139,600.00

Nov-
To Salaries and Wages Expenses A/c $139,600.00
30
(Being salaries and wages expenses a/c closed)

Profit and Loss A/c Dr $24,060.00

Nov-
To Advertising Expense A/c $24,060.00
30
(Being advertising expense a/c closed)

Profit and Loss A/c Dr $13,760.00

Nov-
To Utilities Expense A/c $13,760.00
30
(Being utilites expense a/c closed)

Profit and Loss A/c Dr $11,700.00

Nov- To Maintenance and Repairs Expense A/c $11,700.00

30
(Being Maintenance and Repairs Expense A/c
closed)

Profit and Loss A/c Dr $16,480.00

Nov-
To Freight-out A/c $16,480.00
30
(Being Freight-out A/c closed)

Profit and Loss A/c Dr $23,930.00

Nov-
To Rent Expense A/c $23,930.00
30
(Being Rent Expense A/c closed)

Profit and Loss A/c Dr $11,200.00

Nov-
To Depreciation A/c $11,200.00
30
(Being depreciation a/c closed)

Profit and Loss A/c Dr $5,540.00

Nov-
To Interest Expenses A/c $5,540.00
30
(Being interest expenses a/c closed)

Trading A/c Dr $249,620.00

Nov- To Profit and Loss A/c $249,620.00

30
(Being gross profit transferred to profit and loss
account)

Nov- Owner's Capital A/c $1,200.00

 To Profit and Loss A/c $1,200.00
30
(Being net loss transfer to capital a/c)

Post Closing Trial Balance

Particulars Debti Credit

Cash $8,770.00

$30,880.0
Accounts Receivables
0

Supplies $2,010.00

$130,100.
Equipment
00

$43,900.0
Inventory
0

$13,210.0
Drawings
0

Profit and Loss Account $1,200.00

Accumulated Depreciation - $37,480.0

Equipment 0

$52,000.0
Notes Payable
0

$43,430.0
Accounts Payable
0

$91,620.0
Owner's Capital
0

Interest Payable $5,540.00

$230,070. $230,070.
Total
00 00
Notes:
Computation of Gross Profit and Net Loss

$755,800.
Sales
00

Less: Sales return -$8,980.00

$746,820.0
Net Sales
0

Less: Cost of goods sold

Beginning Inventory $44,400.00

$497,200.0
Add: Cost of goods sold
0

-
Less: Closing Inventory
$43,900.00

$497,700.0
Less: Total Cost of Goods Sold
0

$249,120.0
Gross Profit
0

Less: Expenses

-
salaeris and wages $139,600.0
0

-
advertising expense
$24,060.00

-
Utilities expense
$13,760.00

Supplies expense -$4,050.00

-
depreciation
$11,200.00

interest expenses -$5,540.00

Maintenance and Repairs -

expense $11,700.00

-
freight out
$16,480.00

-
Rent expense
$23,930.00

-
Total expense $250,320.0
0

Net loss $1,200.00

P5-6A

Sales Revenue 1,164,700

Less: Sales returns and allowances -20,000
Net sales 1,144,700
Less: Cost of goods sold
Beginning Inventory 51,800
Net purchased 576,500
Freight-in 7,600
Goods Available for sale 635,900
Less: ending inventory -40,900 595,000
Gross Profit 549,700

P5-3A

Particulars Amount Amount

Sales:
Sales Revenue 720,000
Less: Sales returns and 8,000
allowances
Net sales 712,000

Less: Cost of goods sold -518,000

Gross Profit 194,000
Operating Expenses:
Freight-out 6,500
Depreciation expense 11,000
Insurance Expense 7,000
Property tax expense 2,500
Rent expense 15,000
Salaries and wages expense 96,000
Sales commissions expense 11,000
Utilities expense 8,500
Total operating expenses -157,000
Income from operations: 36,500
Other revenues and gains
Interest revenue 2,000
 Other expenses and losses
Interest expense 6,400
Total -4,400
Net income 32,100

Date Account titles and explanation Ref. Dr. Cr.

1-Jun Inventory 120 1,600
Account payable 201 1,600
3-Jun Account receivable 112 2,500
Sales 401 2,500
The cost of book sold 505 1,440
Inventory 120 1,440
6-Jun Account payable 201 100
Sales returns 412 100
9-Jun Account Payable 201 1,500
Inventory 120 30
Cash 101 1,470
15-Jun Cash 101 2,500
Account Payable 201 2,500
17-Jun Account receivable 112 1,800
Sales 401 1,800
The cost of book sold 505 1,080
Inventory 120 1,080
20-Jun Inventory 120 1,800
Account payable 201 1,800
24-Jun Sales discount 414 36
Cash 101 1,764
Account receivable 112 1,800
26-Jun Account payable 201 1,800
Inventory 120 36
Cash 101 1,764
28-Jun Account Payable 201 1,600
Sales 401 1,600
The cost of book sold 505 970
Inventory 120 970
30-Jun Sales returns and allowances 412 120
Account receivable 112 120
Inventory 120 72
The cost of book sold 505 72
P

P4-3A amount
 amount

Service revenues 60,000

total 60,000

Expenses
Maintenance and repairs expense 1,700
Depreciation expense 2,800
Insurance 1,800
Salaries and wages 30,000
Utilities 1,400
Total 37,700
Net income 22,300

P4-6A

The incorrect The The

entry correct correcting
entry entry
1 Cash 950 Cash 590 Accounts 360
Accounts 950 Account receivable 360
receivable receivable 590 Cash
2 Miscellaneous 75 Advertising 75 Advertising 75
expense Cash 75 Miscellaneous
cash 75 expense 75

3 Salaries & 1,900 Salaries & 1,200 Salaries & 700

wages wages wages
Cash 1,900 expense expense
Salaries & 700 Salaries &
wages wages 700
payable payable
Cash 1,900
Supplies 310 Equipment 310 Equipment 310
Account Accounts Supplies 310
payable 310 payable 310
Equipment 69 Repair 96 Repair 96
Cash 69 expense Expense
cash 96 Equipment 69
Cash 27