Module 04 Assignment Merchandising BusinessThe following January transactions are for The Candy Store.
Assume a perpetual inventory and use the gross method when applying the credit terms discount on invoices.
In this assignment all purchase transactions are first and the sales transactions are next followed by an adjusting entry. Use Excel best practices.
During January the following purchase transactions occurred:
8-Jan Purchased $5,900 of merchandise from The Chocolate Shop.
Terms 2/15, n/45, FOB shipping point. The Candy Store prepaid $300 in shipping and the amount was added it to their invoice.
10-Jan Purchased $350 of supplies on account from The Office Barn.
Terms 2/10, n/30, FOB destination.
17-Jan A return was recorded for $1400 of the merchandise purchased on January 8 and the customer received credit.
19-Jan Paid for the supplies purchased on January 10.
22-Jan Paid the Chocolate Shop the amount due from the January 8 purchase in full.
During January the following sales transactions occurred:
14-Jan Sold $950 (cost $500) of merchandise (inventory) on account to Maple Fair.
Terms 3/15, n/45, FOB destination.
15-Jan Paid $75 freight charges to deliver goods to Maple Fair.
18-Jan Sold $650 (cost $350) of merchandise to cash customers.
24-Jan Maple Fair returned $175 (cost $100) of merchandise from the January 14 sale.
28-Jan Received payment in full from Maple Fair for the January 14 sale.
Record this adjusting entry.
31-Jan The Candy Store’s inventory account shows a balance of $27,500, but the physical counts shows only $27,350 of inventory exists.
Record the adjusting entry.
Requirements:
1
Journalize the transactions (explanations are not necessary).
Date
Accounts
Totals
Post
Debit
Credit
Module 04 Assignment Merchandising Business
Using the August adjusted trial balance, prepare the monthly multi-step income statement, retained earnings statement
and classified balance sheet for Hobbies Galore. Complete the gray shaded areas for each statement below. Use professio
Hobbies Galore
Adjusted Trial Balance
August 31, 20XX
Acct. #
1
Account
10 Cash
11 Accounts Receivable
12 Inventory
13 Supplies
14 Prepaid Rent
15 Equipment
16 Accumulated depreciation-equipment
17 Building
18 Accumulated depreciation-building
21 Accounts Payable
22 Wages Payable
23 Unearned sales revenue
25 Mortgage payable (long term)
31 Common Stock
32 Dividends
33 Retained earnings
41 Sales Revenue
42 Sales returns and Allowances
43 Sales Discounts
51 Cost of goods sold
61 Rent Expense
62 Interest Expense
63 Commission Expense
64 Delivery expense
65 Insurance expense
66 Office salaries expense
67 Advertising Expense
68 Utilities Expense
Total
Debit
$
Credit
22.300
8.800
29.000
1.200
5.000
27.000
$
13.000
190.000
52.500
16.500
1.000
2.500
42.000
35.000
12.000
112.800
274.900
$
4.900
2.500
119.000
5.200
700
31.700
1.200
10.200
54.000
11.500
14.000
550.200 $
550.200
Prepare the multiple step Income Statement for the period ending August 31, 20XX.
Hobbies Galore
Income Statement
For the month ended August 31, 20XX
Sales Revenue:
Less: Sales Returns and Allowances
Sales Discounts
Net Sales Revenue
Cost of Goods Sold
Gross Profit
Operating Expenses:
Selling Expenses:
Commission Expense
Advertising Expense
Delivery Expense
General and Administrative Expenses:
Office Salaries Expense
Utilities Expense
Rent Expense
Insurance Expense
Operating Profit
Other Revenues (Expenses):
Interest Expense
Net Profit
2
Prepare the Statement of Retained Earnings for the month ending 08/31/20XX.
Hobbies Galore
Statement of Retained Earnings
For the month ending August 31, 20XX
Retained Earnings, August 1, 20XX
Plus: Net Profit
Less: Dividends
Net Increase in Retained Earnings
Retained Earnings, August 31, 20XX
3
Prepare the classified Balance Sheet for the month ending 08/31/20XX.
Hobbies Galore
Balance Sheet
August 31, 20XX
ASSETS
Current Assets:
Cash
Accounts Receivable
Inventory
Supplies
Prepaid Rent
Total Current Assets
Fixed Assets:
Equipment
Less: Accumulated Depreciation, Equipment
Building
Less: Accumulated Depreciation, Building
Total Assets
4
Answer these questions. Use complete sentences and write in good form.
1. How are the income statement and the balance sheet different? Why are the dates recorded differently on the inco
sheet?
2. Explain how gross profit, operating profit and net profit different?
3. What is the book value of the equipment?
nt, retained earnings statement
h statement below. Use professional Excel techniques.
Credit
$
13.000
52.500
16.500
1.000
2.500
42.000
35.000
112.800
274.900
$
550.200
s Galore
tatement
ed August 31, 20XX
Hobbies Galore
Balance Sheet
August 31, 20XX
LIABILITIES
Current Liabilities:
Accounts Payable
Wages Payable
Unearned Sales Revenue
Total Current Liabilities
Long-Term Liabilities:
Mortgage Payable
Total Liabilities
STOCKHOLDER’S EQUITY
Common Stock
Retained Earnings
Total Stockholder’s Equity
Total Liabilities and Stockholder’s Equity
recorded differently on the income statement and the balance
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