Chapter 5
Problems: Set B
P5-5BAn inexperienced accountant prepared this condensed income statement for Wright Company a retail firm that has been in business for a number of years.
WRIGHT COMPANY
Income Statement
For the Year Ended December 31 2014
Revenues
Net sales $952000
Other revenues 16000
968000
Cost of goods sold 548000
Gross profit 420000
Operating expenses
Selling expenses 160000
Administrative expenses 104000
264000
Net earnings$156000
As an experienced knowledgeable accountant you review the statement and determine the following facts.
Instructions
Prepare a correct detailed multiple-step income statement.
*P5-9BAt the beginning of the current season on November 1 the ledger of Winona Sports showed Cash $3300 Inventory $4700 and Common Stock $8000. The following transactions occurred during November 2014.
Nov. 5 Purchased hockey sticks and pucks on account from Hi-Stick Co. $1600 terms 2/10 n/60.
7 Paid freight on Hi-Stick Co. purchases $90.
9 Received credit from Hi-Stick Co. for merchandise returned $350.
10 Sold merchandise on account for $1000 terms n/30.
12 Purchased gloves socks and other accessories on account from Twin City Sportswear $945 terms 1/10 n/30.
14 Paid Hi-Stick Co. in full.
17 Received credit from Twin City Sportswear for merchandise returned $45.
20 Made sales on account for $1330 terms n/30.
21 Paid Twin City Sportswear in full.
27 Granted credit to customers for clothing that did not fit properly $150.
30 Received payments on account for $1900.
The chart of accounts for Winona Sports includes Cash Accounts Receivable Inventory Accounts Payable Common Stock Sales Revenue Sales Returns and Allowances Purchases Purchase Returns and Allowances Purchase Discounts and Freight-In.
Instructions
(a) Journalize the November transactions using a periodic inventory system.
(b) Using T-accounts enter the beginning balances in the ledger accounts and post the November transactions.
(c) Prepare a trial balance on November 30 2014.
(d) Prepare an income statement through Gross profit assuming inventory on hand at November 30 is $5196.