Reference no: EM13150

Question 2 

Sam Jobs is the sole proprietor of I-Tech. Sales are made on a variety of credit terms to various customers and some sales are for cash. I-Tech uses a perpetual inventory system. The following transactions occurred during the month of September 2012:

Sep. 1     Purchased merchandise (cell phones) on credit from General Phone Supply for $3,500, terms, 3/10, n30, FOB shipping

Sep. 2     Paid freight charges of $95 on the shipment of merchandise from General Phone Supply

Sep. 4     Sold merchandise to Home Techies for $900; cost was $500, terms 2/10, n30

Sep. 5     Merchandise costing $225 was sold for $500 cash today

Sep. 6     When unpacking the cell phones received from General Phone Supply, it was noticed that two were damaged. The merchandise costing $500 returned to General Phone Supply.

Sep. 7     Purchased merchandise on account from Bretton Electronics for $1,200, terms, 2/10, n30

Sep. 8     Sold merchandise costing $1,850 to Sears Canada for $4,000, 2/15, n30

Sep. 9     Paid freight charges of $150 regarding the sale to Sears Canada on September 8^th

Sep. 10   Paid the balance due to General Phone Supply

Sep. 11   Refunded a customer $100 for return of merchandise from the sale on September 5^th

Sep. 12   Sears Canada returned $1,000 worth of merchandise as the incorrect model was sent

Sep. 18   Purchased merchandise (1,000 iPods) from Music World on account. The list price was $4,000; however, because of the large order, a trade discount of 15% was granted.

Sep. 19   Received payment from Sears Canada

Sep. 20   Paid $15,000 cash for a new delivery van for $15,000

Sep. 24   Returned $200 worth of merchandise (list price) purchased from Music World on September 18^th

Sep. 26   Paid Bretton Electronics for the purchase made on September 7^th

Sep. 30   Received payment from Home Techies regarding the sale on September 4^th

Sep. 30   Physical count of the merchandise inventory indicated an amount of $800 less than what the General Ledger indicated

Required: Prepare journal entries for the above transactions. Omit explanations but show all calculations.

Date	Account Titles	PR	Debit	Credit

Question 3 

Quik Runners is a distributor of high performance runners to various retailers. All sales on account have terms, 2/20, n30. The balance in Accounts Receivable as at June 30^th was $11,970 and Merchandise Inventory had a balance of $28,500. Below is the schedule of accounts receivable as at June 30, 2012 and transactions for the month of July 2012.

Quik Runners Schedule of Accounts Receivable June 30, 2012
Alpha Shoes	mce_markernbsp; 2,500
BattaWholesalers	1,420
Master Performance Company	3,200
Peak Runners	4,850
Total	$11,970

 

July 3      Sold merchandise costing $1,320 to Batta Wholesalers for $3,300, on account, invoice 411

July 5      Paid freight charges of $50 on the shipment of merchandise to Batta Wholesalers by issuing cheque number 205

July 6      Batta Wholesalers returned $825 of merchandise purchased on July 3^rd as the shoes were the incorrect style

July 7      Issue cheque number 206 for $125 to Anderson Trucking for merchandise purchased from Mega Shoes Suppliers on June 28^th

July 8      Sold merchandise costing $500 to Athletics Store on account for $1,100, invoice 412

July 10    Sold merchandise costing $375 to Shoes Galore for $800 cash, invoice 413

July 12    Sold $1,500 of merchandise on credit to Peak Runners for $2,500, invoice 414.

July 13    Receive $1,000 on account from Alpha Shoes. It is past the discount period.

July 16    Sold $1,200 of merchandise to Master Performance Company for $2,800 on account, invoice 415.

July 21    Received payment from Athletics Store for the July 8^th transaction

July 22    Purchased 100 pair of Nike shoes from Mega Shoes Suppliers for $1,200, terms 2/10, n30, FOB shipping point

July 25    Purchased office supplies of $250 on account from Staples, terms n30

July 26    Peak Runners returned 50% of their order of July 12^th as the sizes were incorrect

July 30    Sold merchandise costing $800 to Athletics Store for $1,700 on account, invoice 416

Required:

 

1.         Post the transactions that should be posted to the Sales Journal for the month of July and foot and crossfoot the journal. (6 marks)

 

Date	Account Debited	Invoice No.	PR	Accounts Receivable Dr. Sales Cr	Cost of Goods Sold Dr. Merchandise Inventory Cr.
2012

 

2.         Prepare a Schedule of Accounts Receivable as at July 31, 2012.

Quik Runners Schedule of Accounts Receivable July 31, 2012

 

3.         Calculate the balance in the Merchandise Inventory account as at July 31, 2012. Show all calculations. 

Question 4 

Stardust Company, who uses a perpetual inventory system, completed the following transactions during the month of February 2012:

Feb. 3     Purchased merchandise on credit from Bennett Company for $2,500, terms 3/10, n30, FOB shipping

Feb. 4     Sold merchandise on credit to Kelly Smith for $850, terms 2/10, n30

Feb. 5     Received $500 for a cash sale of merchandise

Feb. 8     Hired an assistant for $1,200 per month who will start work next week

Feb. 10   Issued cheque #123 for $50 to pay the freight charges on the February 3^rd transaction

Feb. 14   Kelly Smith returned $150 worth of merchandise from the February 4^th sale

Feb. 21   Purchased office equipment for $2,650 by issuing a cheque for $650 and the balance is on credit. The equipment has a useful life of three years.

Feb. 28   Prepared the adjusting entry to depreciate the office equipment purchased on February 21^st

Required:

1.         For each transaction, identify into which special journal, if applicable, it should be journalized using the codes below. Enter the appropriate code in the blank provided. Only one code can be used per transaction. 

Journal Codes

Sales Journal (SJ)

Purchases Journal (PJ)

Cash Receipts Journal (CR)

Cash Disbursements Journal (CD)

General Journal (GJ)

No journal (N/A)

Transactions

Feb. 3     ______

Feb. 4     ______

Feb. 5     ______

Feb. 8     ______

Feb. 10   ______

Feb. 14   ______

Feb. 21   ______

Feb. 28   ______

2.         Discuss how technology-based information systems impact accounting.

Question 5 

Sunnyside Nursery's year-end trial balance, in alphabetical order, appears below. The building has a total space of 2,000 square feet of which the office uses 400 square feet and the balance is used for the store. The insurance is allocated by square footage.

Sunnyside Nursery Adjusted Trial Balance December 31, 2012
Account Title	Debit	Credit
Accounts Payable		mce_markernbsp;   5,500
Accounts Receivable	mce_markernbsp;   7,400
Accumulated Depreciation, Building		27,000
Accumulated Depreciation, Delivery Trucks		5,500
Advertising Expense	875
Depreciation Expense, Building	3,000
Depreciation Expense, Delivery Trucks	1,575
Building	105,000
Cash	15,090
Cost of Goods Sold	162,500
Delivery Trucks	30,500
Insurance Expense	1,700
Interest Expense	500
Jan Nelson, Capital		98,000
Jan Nelson, Withdrawals	18,000
Land	50,000
Maintenance and Fuel Expense, Delivery Trucks	3,850
Merchandise Inventory	2,895
Note Payable		5,000
Office Supplies	850
Office Supplies Expense	425
Prepaid Insurance	1,460
Salaries, Office	9,000
Salaries, Sales	24,560
Sales		300,000
Sales Discounts	1,200
Sales Returns and Allowances	3,550
Telephone Expense, Office	385
Telephone Expense, Store	285
Unearned Revenue		3,600
Totals	$444,600	$444,600

Required:

1.         Prepare a classified, multiple-step income statement for Sunnyside Nursery.

2.         Calculate the profit margin ratio

3.         Prepare journal entries to close the accounts for year-end December 31, 2012. 

Date	Account Titles	PR	Debit	Credit

Question 6

1.         Explain how the amounts in the subsidiary accounts are tested for accuracy. 

2.         Explain the goals and uses of special journals.

Question 7 

Greetmart Cards is a distributor of greeting cards to various retailers. Below is the schedule of accounts payable as at February 28, 2012 and transactions for the month of March 2012:

Greetmart Cards Schedule of Accounts Payable February 28, 2012
Creative Works	$1,500
Hallmart Wholesalers	500
Merry Makers Company	900
Party Suppliers	1,800
Total	$4,700

 

Mar. 3     Purchased merchandise on credit from Hallmart Wholesalers for $3,000, terms 3/10, n30

Mar. 5     Paid freight charges of $50 on the shipment of merchandise from Hallmart Wholesalers by issuing cheque number 181

Mar. 6     Returned $800 of the merchandise purchased on March 3^rd

Mar. 8     Purchased merchandise on credit from Party Suppliers for $800, terms 2/20, n30

Mar. 10   Sold merchandise to Save on Cards for $800

Mar. 12   Purchased merchandise on credit from Creative Works for $2,000, terms 2/10, n30

Mar. 13   Paid the balance owing to Merry Makers by issuing cheque number 182. It is past the discount period.

Mar. 16   Purchased equipment from Total Office Suppliers for $4,000, n30

Mar. 21   Returned $500 of merchandise to Creative Works

Mar. 25   Paid Party Suppliers $900 by issuing cheque number 183

Mar. 26   Purchased merchandise on account from Merry Makers for $700, terms 2/10, n30

Mar. 30   Purchased merchandise on account from Party Suppliers for $500, terns 2/20, n30

Required:

1.         Post the transactions that should be posted to the Purchases Journal for the month of March and foot and crossfoot the journal.

Date	Account Credited	Date of Invoice	Terms	PR	Accounts Payable Cr.	Merchandise Inventory Dr	Other Accounts Dr.
2012

2.         Prepare a Schedule of Accounts Payable as at March 31, 2012.

Greetmart Cards Schedule of Accounts Payable March 31, 2012