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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. 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)
- Purchased $700 merchandise for cash
- Purchased merchandise from Shearstown Propeller Co., on account $1,200, terms 2/10, n/30
- Returned 2 propellers to the Shearstown Propeller Co. for $300.
13 Purchased office supplies from Business Depot on account $190 (terms n/30 )
- Received payment from Jim Parsons.
- 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:
- Prepare all journal entries (without explanation) needed to record these transactions.
- 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:
- Prepare a Classified multi-step income statement, down to the Gross Profit line only, for the five months ended December 31, 2019.
- Calculate the Gross Profit ratio
- 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)
- The Unearned Revenue account has a balance of $18,500. On December 31, $4,500 remains unearned.
- The annual building amortization is $12,500.
- The Merchandise Inventory account shows a balance of $25,400. A physical count of the
Inventory was taken and it totaled $$24,000. .
- Unbilled and uncollected services provided to customers totalled $4,550.
- 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 :
- The revenue recorded in (d) above was collected on January 4, 2019.
- 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:
- What selling price does the manager want?
- What selling price has Megan calculated?
- If there are 70 work boots, how much will the store lose in sales if the price is not corrected?
Expert Solution
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