Homework answers / question archive / Question 2) Bay Roberts Marine Supply deals in a wide variety of boating accessories and uses a perpetual inventory system

Question 2) Bay Roberts Marine Supply deals in a wide variety of boating accessories and uses a perpetual inventory system

Accounting

Share With

---

Question 2) Bay Roberts Marine Supply deals in a wide variety of boating accessories and uses a perpetual inventory system.  The following is a partial list of their transactions during the month of June.

Note:    All sales on account have terms of 1/15, n/45.

June 1   Sold merchandise on account to Jim Parsons, $600 (cost $250)

4. Purchased $700 merchandise for cash

7. Purchased merchandise from Shearstown Propeller Co., on account $1,200, terms 2/10, n/30
8. Returned 2 propellers to the Shearstown Propeller Co. for $300.

13 Purchased office supplies from Business Depot on account $190 (terms n/30 )

14. Received payment from Jim Parsons.
15. Owner (your name) invested a car into the business. The car has a $4,000 market value.

17 Paid Shearstown Propeller Co. the amount owing.

Required:

1. Prepare all journal entries (without explanation) needed to record these transactions.
2. Prepare journal entries for the transactions on June 1, 7, 8, and 17 assuming that the  company uses a Periodic inventory system

Question 3

Keith’s CDs has been in business since August 1, 2019.  The adjusted trial balance on December 31, 2019 for Keith’s CD’s is as follows:

Keith’s CDs

Adjusted Trial Balance

December 31, 2019

 

                                                                                                                                                                Debit                     Credit

 

Cash in Bank                                                                                                                                         2,187

Accounts Receivable                                                                                                                        1,226

Inventory                                                                                                                                                     0

Store supplies on hand                                                                                                       537

Prepaid Insurance                                                                                                                                525

Store Equipment                                                                                                                              12,200

Accumulated Depreciation – Store Equipment                                                                                     1,000

Accounts Payable                                                                                                                                                              1,503

Salaries Payable                                                                                                                                                                     204

Credit Union Loan Payable                                                                                                                                           10,903

Capital – Keith Barrett                                                                                                                                      9,000

Withdrawals – Keith Barrett                                                                                                          4,100

Sales – CD’s                                                                                                                                                                        27,351

Sales Returns and Allowances                                                                                         200

Sales Discounts                                                                                                                      514

Purchases                                                                                                                                           19,600

Purchases Returns and Allowances                                                                                                                               100

Purchase Discounts                                                                                                                                                              284

Rent Expense                                                                                                                                      2,000

Store Salaries Expense                                                                                                    2,135

Advertising Expense                                                                                                                         1,700

Store Supplies Expense                                                                                                      278

Insurance Expense                                                                                                                               375

Transportation – In                                                                                                                              565

Depreciation – Store Equipment                                                                                                 1,000

Transportation – Out                                                                                                                           200

Loan Interest Expense                                                                                                                        403

Bookkeeping Expense                                                                                                                        600                                   

Total                                                                                                                                                      50,345                   50,345

 

A physical count of the inventory was taken on May 31, 2019 and it totaled $3,791.  The Credit Union Loan Payable has $3,000 due in 2020

Required:

1. Prepare a Classified multi-step income statement, down to the Gross Profit line only, for the     five months ended December 31, 2019.

 

2. Calculate the Gross Profit ratio

 

3. Calculate Current Assets and the Current Ratio

4. Fill in the missing amounts.  Indicate a loss by placing brackets around the amount.  Each column of figures is a separate problem.

 

                                                  A                             B                             C                             D                            

 

Sales                                      70,000                   85,000                   60,000                   ______     

 

Beginning           

Inventory                            15,000                   30,000                   ___                        ______    

 

Net

Purchases                           45,000                         ____               42,000                   10,000

 

Ending

Inventory                            ___        10,000                   10,000                   2,000

 

Cost of

Goods Sold                         51,000                   70,000                   50,000                   13,000

 

Gross Profit                              ___                         ___                       ____               ( 1,000)

 

5. JustJunk Waste’s year end is December 31.  The information in (a) to (e) is available at year-end  for the preparation of adjusting entries: (Note: the company uses a perpetual inventory system)

 

1. The Unearned Revenue account has a balance of $18,500. On December 31, $4,500 remains  unearned.

 

2. The annual building amortization is $12,500.

 

3. The Merchandise Inventory account shows a balance of $25,400.  A physical count of the

Inventory was taken and it totaled $$24,000. .

 

4. Unbilled and uncollected services provided to customers totalled $4,550.

 

5. The utility bill for the month of December was received but is unpaid; $1,200.

     Required:

Prepare the required adjusting entries at December 31, 2018, for (a) to (e).

 Bonus (Marks)

  Prepare the following entries :

6. The revenue recorded in (d) above was collected on January 4, 2019.
7. The $1,300 utility bill accrued in (e) above was paid on January 16, 2019.

Question #6      

On February 1, 2021 you purchased $5,000 of merchandise from Kent Ltd. on terms 1/20, n/60.  You currently have a Line of Credit at the bank at an interest rate of 12%.  As the manager of your store, what is your best course of action to take on February 20, 2021.  In other words, should you take the discount and pay Kent Ltd or wait for 60 days and pay your bill.  (SHOW ALL CALCULATIONS)

Question #7 

Megan works at a dry goods store and needs to determine the selling price for work boots.  The work boots have a cost of $60.  The manager asked Megan to price the work boots with a 70% target gross margin. Megan has priced the work boots with a 70% markup percentage.

Required:

1. What selling price does the manager want?
2. What selling price has Megan calculated?
3. If there are 70 work boots, how much will the store lose in sales if the price is not corrected?