ACCY 201 Exam 2 Study Guide

11. Income from operations is gross profit less a. administrative expenses. b. operating expenses. c. other expenses and losses. d.selling expenses. 12. An enterprise which sells goods to consumers is known as a a. proprietorship. b. corporation. c. retailer. d. service firm. 13. Which of the following would not be considered a merchandiser? a. house cleaning business b. drugstore c. book store d. grocery store 14. A merchandiser that sells directly to consumers is a a. retailer. b. wholesaler. c. broker. d. service enterprise. 15. Two categories of expenses for merchandisers are a. cost of goods sold and financing expenses. b. operating expenses and financing expenses. c. cost of goods sold and operating expenses. d. sales and cost of goods sold. Use the following information to answer questions 16-18. During 2006, California Salon Enterprises generated revenues of $60,000. Their expenses were as follows: cost of goods sold of $30,000, operating expenses of $12,000 and a loss on the sale of equipment of $2,000. 16. California Salon’s gross profit is a. $60,000 b. $30,000 c. $18,000 d. $16,000 17. California Salon’s operating income is a. $60,000 b. $30,000 c. $18,000 d. $12,000 18. California Salon’s net income is a. $60,000 b. $30,000 c. $18,000 d. $16,000 19. Flynn Flint Company purchased merchandise inventory with an invoice price of $3,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Flynn Company pays within the discount period? a. $3,000. b. $2,940. c. $2,700. d. $2,760. 1 20. Sales revenues are usually considered earned when a. cash is received from credit sales. b. an order is received. c. goods have been transferred from the seller to the buyer. d. adjusting entries are made. 21. West Eaton Company sells merchandise on account for $1,000 to Little Tang Company with credit terms of 2/10, n/30. Little Tang Company returns $300 of merchandise that was damaged, along with a check to settle the account within the discount period. What entry does West Eaton Company make upon receipt of the check? a. Cash............................................................................................... 700 Accounts Receivable............................................................ 700 b. Cash..........................................................................................686 Sales Returns and Allowances.......................................................314 Accounts Receivable............................................................ 1,000 c. Cash............................................................................................... 686 Sales Returns and Allowances...................................................... 300 Sales Discounts............................................................................ . 14 Accounts Receivable............................................................ 1,000 d. Cash............................................................................................. .. 980 Sales Discounts........................................................................... .. 20 Sales Returns and Allowances................................ ............ 300 Accounts Receivable................................................ ............700 Use the following information to answer questions 22-25. During August, 2006, Green Grocery Supply Store generated revenues of $30,000. Their operating expenses were as follows: cost of goods sold of $12,000 and operating expenses of $2,000. The company also had rent revenue of $500 and a gain on the sale of a delivery truck of $1,000. 22. Green Grocery’s gross profit for August, 2006 is: a. $30,000 b. $19,000 c. $18,000 d. $16,000 23. Green Grocery’s non-operating income (loss) for the month of August 2006 is a. $0 b. $500 c. $1,000 d. $1,500 24. Green Grocery’s operating income for the month of August 2006 is a. $30,000 b. $19,500 c. $18,500 d. $16,000 25. Green Grocery’s net income for August 2006 is a. $18,000 b. $17,500 c. $16,500 d. $16,000 26. Inventories affect a. only the balance sheet. b. only the income statement. c. both the balance sheet and the income statement. d. neither the balance sheet nor the income statement. 2 27. Merchandise inventory is a. reported under the classification of Property, Plant, and Equipment on the balance sheet. b. often reported as a miscellaneous expense on the income statement. c. reported as a current asset on the balance sheet. d. generally valued at the price for which the goods can be sold. 28. If goods in transit are shipped FOB destination a. the seller has legal title to the goods until they are delivered. b. the buyer has legal title to the goods until they are delivered. c. the transportation company has legal title to the goods while the goods are in transit. d. no one has legal title to the goods until they are delivered. 3 11. B 12. C 13. A 14. A 15. C 16. B 17. C 18. D 19. B 20. C 21. C 22. C 23. D 24. D 25. B 26. C 27. C 28. A 4 Z14 Z1. which method(s) would be used? 5 . FIFO LIFO Weighted average Specific identification b) If asked to calculate ending inventory and the cost of goods sold for each cost flow assumption. Z8. Z3. 2. Z11. Z12. Z14 Required: a) Assuming a perpetual system is in use. 3. Z9. determine the cost of goods sold and the ending inventory using each of the following methods: 1. Z5 Z6. Z7.The ABC Company had the following inventory record for the month of January: Date 1/1 1/5 1/11 1/28 Description Beginning inventory Sale Purchase Sale # of Items 5 2 9 7 Unit Price $20 12 Item Z1. Z5 Z2. Z7. Z3. Z10. 4. Z9. Z13. Z6. Z8. Z2. Z4. FIFO Perpetual Date 1/1 Beginning Inventory 1/5 1/11 Purchases Sales at Cost Inventory Balance 5 @ $20 = $100 2 @ $20 = $ 40 9 @ 12=$108 1/28 Total CGS 2. LIFO Perpetual Date 1/1 Beginning Inventory 1/5 1/11 Purchases 3 @ $20 = $ 60 4 @ $12 = 48 $108 $ 40 + 108 = $148 3 @ $20 = $ 60 3 @ $20 = $ 60 9 @ $12 = 108 $168 5 @ $12 = $ 60 Ending Inventory Sales at Cost Inventory Balance 5 @ $ 20 = $100 2 @ $20 = $ 40 9 @ $12=$108 1/18 7 @ $12 = $ 84 3 @ $20 = 60 3 @ $20 = $ 60 9 @ $12 = 108 $168 3 @ $20 = $ 60 2 @ $12 = 24 $ 84 Ending Inventory Total CGS $40 + 84 = $124 6 .a) 1. Specific identification makes no assumptions about the flow of costs. Z4 9 @ $12=$108 3 @ $20 = $ 60 Z6-Z14 Z1. 7 .3. Z3 1 @ $20 = $ 20 2 @ $20 = $ 40 Z4 Z6. Specific Identification Perpetual Date Purchases 1/1 Beginning Inventory 1/5 1/11 7 @ $14 = $ 98 $ 40 + 94 = $138 3 @ $20 = $ 60 3 @ $20 = $ 60 9 @ $12 = 108 $168 $168/12 = $ 14 CPU 5 @ $14 = $ 70 Ending Inventory Sales at Cost Inventory Balance 5 @ $ 20 = $100 Z1-Z5 2 @ $20 = $ 40 3 @ $20 = $ 60 Z2. LIFO. Z5 Z1. Z8. Z4 9 @ $12 = 108 Z6-Z14 $168 Z1. and weighted average (also called moving average and average –cost). Z3. Z9. Z3. Weighted Average Perpetual Date 1/1 Beginning Inventory 1/5 1/11 Purchases Sales at Cost Inventory Balance 5 @ $20 = $100 2 @ $20 = $ 40 9 @ 12=$108 1/18 Total CGS 4. Z7. 4 @ $12 = 48 Z14 Z10-13 5 @ $12 = $ 60 $ 68 $ 100 Ending Inventory $40 + 100 = $140 1/18 Total CGS b) FIFO. B) Journalize the entries required by the reconciliation.00 Add: Outstanding Checks 930.20 Less: Deposits in transit 530.20 Add: NSF check 590.Lisa Beja is unable to reconcile the bank balance at January 31.20 A) Prepare a correct bank reconciliation.660. Lisa’s reconciliation is as follows: Cash balance per bank $3.875.00 Less: Bank service charge 25.275.00 Adjusted balance per bank $4225. 8 .00 Adjusted balance per books $4.20 Cash balance per books $3. ....20 Cash balance per books $3.....875...........00 Cash.260...............................260...... 590. 25...............660.00 25...................................................00 Cash …………………………………………………………………………………………………............00 9 ...............00 Miscellaneous Expense.........20 530........................................... 590........... 25......20 (b) Accounts Receivable...00 NSF check Bank service charge 590..(a) Cash balance per bank statement Add: Deposits in transit Less: Outstanding checks $3.....00 Less: 930...................20 Adjusted cash balance per books $3.....................00 Adjusted cash balance per bank $3......... Chevron Company has the following bank information: cash balance per bank $7.00. 10 .00 and a bank service charge $20.00.420. outstanding checks $762.At July 31. Determine the adjusted cash balance per bank at July 31. deposits in transit $1.00.620. ........................................................................................................420 Add: Deposits in transit........................... 1........................................... $8.278 11 .................................................................................................................. 762 Adjusted cash balance per bank................. $7..............Cash balance per bank..............620 Less: Outstanding checks......................................................................................................... and outstanding checks $800. Determine the adjusted cash balance per books at May 31.At May 31. interest earned on checking account balance $40.900 and the following additional data from the bank statement: charge for printing Delta Company checks $35. 12 .00. Delta Company has a cash balance per books of $8.00.00. ................... $8....Cash balance per books.................................................................905 13 .......... 35 Adjusted cash balance per books................................................................................................... $8................................................................................................................................................................................. 40 Less: Charge for printing company checks..........900 Add: Interest earned......................... no. Inc. 14 . was not recorded in the journal. 2) Discovered that a deposit of $1. 5) Found that check no.D.003 made on Oct 31 was not recorded on the bank statement. 2022.50 was not recorded in the journal. after Little’s accountant has posted from the journal. The accountant took the following steps: 1) Verified that canceled checks were recorded correctly on the bank statement. 4) Noted that a credit memo for a note collected by the bank from Lee and Brock. 2024. $67.) 6) Noted that a debit memo for a collection charge and service charge of $25. The present balance of the cash account in the ledger. (The correct amount is $523. 2001 for $523 payable to Davis. no. Prepare a correct bank reconciliation. Journalize the entries required by the reconciliation. is $8. $461.The bank statement of Little’s Floral shows a final balance of $8. 3) Noted outstanding checks: no. Scott was not recorded.. 1916. was recorded in the journal as $532.030. no.966 as of October 31. on account. $119. $827. 7) Noted that a debit memo for an NSF check for $125 from M. $600 principle plus $6 interest.50. 2023. 00 67. 2024 Adjusted cash balance per bank 461.00 A/P 9. 2001 Error Less: NSF check Collection & Bank svc charge $8.00 119.00 Less: Outstanding checks: No.00 A/R 125.00 Interest Revenue 6.Cash balance per bank statement Add: Deposits in transit $8.00 9.2023 No.00 Misc exp 25.00 Cash 606.495.00 827.50 1.00 Cash 125.50 15 .50 Adjusted cash balance per books $8.495.00 125.030.00 606.00 N/R 600.00 Cash 9.50 Cash 25.00 Cash balance per books Add: Note Collected Check No.003. 1916 No.00 $8.00 25.966. 2022 No. 000 1. 2012.000 14.000 255.000 10.Below is a partial listing of the adjusted account balances of Murray Department Store at year end on December 31. prepare a multiple-step income statement for Murray Department Store for the year ended December 31.000 15.000 330.000 22.000 35. 2012.000 800 Instructions Using whatever data you believe appropriate.000 45. Accounts Receivable Cost of Goods Sold Selling Expenses (includes depreciation) Interest Expense Accumulated Depreciation—Building Sales Discounts Merchandise Inventory Administrative Expenses (includes depreciation) Sales Accounts Payable Interest Revenue $ 19. 16 . ......................... Income from operations ......................................800 17 ......................................000 Net sales ....000 Cost of goods sold ..............................................................................................................................................000 Administrative expenses .......................... Other revenues and gains Interest revenue ...... 15.......................000 Total operating expenses ........................................ Operating expenses Selling expenses ...........................................................................000 50.............................................................................................. 22...................................000 3............................................................. 1.............................................................................................. $308................... $330.......................................... 255........ 35...........................................000 Less: Sales discounts ...MURRAY DEPARTMENT STORE Income Statement For Year Ended December 31.....................000 (200) $ 2.....................000 Net Income...................................................................................................... Gross profit .. 2012 Sales revenues Sales ....................................................000 53........................................... 800 Other expenses and losses Interest expense ..... Purchases $450.000.000.000. Purchase Returns and Allowances $8. Freight-in $12. Instructions Compute each of the following: (a) Net purchases (b) Cost of goods available for sale (c) Cost of goods sold 18 .000. and Purchase Discounts $6.000.000.Barkley Company has the following account balances: Beginning Inventory $50. Ending Inventory $70. 000 – $6.000 = $436.000 (b) Cost of goods available for sale: $50.000 = $498.000 – $70.000 – $8.000 + $436.000 19 .000 + $12.(a) Net purchases: $450.000 (c) Cost of goods sold: $498.000 = $428. h. j. d. Received payment for merchandise sold on December 24. The returned items had a cost of $210. terms 3/10. f. Purchased merchandise for cash. The items had a cost of $4.900.500. The items sold had a cost of $3.000. b. Issued a credit memorandum for $300 to a customer who returned merchandise purchased November 29. (FOB shipping point). n/30. Purchased merchandise on credit for $2. Sold merchandise on credit for $5. n/30.000. Sold merchandise on credit for $7. terms 1/20. n/30. terms 2/10. $720. Paid freight charges of $200 for merchandise ordered last month. Paid for the merchandise purchased December 4 less the portion that was returned. g. c. Received payment for merchandise sold December 1. e. 20 . Required: Prepare the general journal entries to record these transactions using a perpetual inventory system.600.A company had the following transactions during December: a. Received a credit memorandum for the return of faulty merchandise purchased on December 4 for $600. i. 980 Accounts Receivable Sales 7.Accounts Receivable Sales 5.000 Accounts Payable Merchandise Inventory 600 600 Merchandise Inventory Cash 200 200 Accounts Payable Merchandise Inventory ($2.500 3.000 Cost of Goods Sold Merchandise Inventory 3.900 4.850 150 5.500 Merchandise Inventory Cash 720 720 Merchandise Inventory Accounts Payable 2.600 2.000 7.000 x .000 Cost of Goods Sold Merchandise Inventory 4.000 5.900 Cash Sales Discounts Accounts Receivable 6.01) Cash 2.000 20 1.600 Sales Returns and Allowances Accounts Receivable 300 300 Merchandise Inventory Cost of Goods Sold 210 210 Cash Sales Discounts Accounts Receivable 4.860 140 7.000 21 . Receives fees in exchange for services. Earns profit from fares only. $278. A merchandising company: a. d. ($417. 30% discount if paid within 2 days. d. Is an investment asset. Uses a purchases account for the cost of new inventory c. Provides more timely information. d. with balance due in 30 days. Sales returns: a. c.000 and cost of goods sold of $278. b. 10% cash discount if the amount is paid within 2 days. 22 . d. $417. Is increasing in frequency in practice. Represent cash discounts. 9. c. Represent trade discounts Sales Returns and Allowances: 3. Requires updating inventory-related accounts only at the end of each period. b. All of the above. All of the above A perpetual inventory system: a. 30% discount if paid within 10 days. Allows a company to determine inventory and cost of goods sold at any time. 7. A company had sales of $695.000 c. The credit terms 2/10. b. $695. 5. b.000). c.000 d. b. 2% cash discount if the amount is paid within 10 days. Earns net income by buying and selling merchandise. c. Its gross margin equals: a. 8. Is a long-term asset.000. Merchandise inventory: a. Earns profit from commissions only. A periodic inventory system: a.1. Is a current asset. b. 4. Refer to merchandise that customers return to the seller after the sale. Refer to reductions in the selling price of merchandise sold to customers. 2. with the balance due in 30 days. Is based on taking a physical count of inventory. d. Includes supplies. b.000. c. d. n/30 are interpreted as: a. and the bank. d. and the bank. Debit to Petty Cash for $62 10. Involves the writer. the casher. A listing of deposits in transit. A list of petty cash amounts. and the company. d. Debit to Expense for $62. Electronic funds transfer. All of the above Banking activities include: a. e. c. Involves the signer. b. Bank accounts. A company had $62 in extra cash at the end of the day. Involves the maker and the payee. Involves the bookeeeper. Can provide useful information about dissatisfied customers and the possibility of lost future sales. c. A bank statement includes: a. All of the above. c. Debit to Cash Over and Short for $62. 23 . d. A closing entry would close any debit balance in: a. Credit to Cash Over and Short for $62. d. Are usually not reported in published financial statements. The proper entry for this excess includes a: a. Cost of Goods Sold d. Involves the maker. All of the above. e. All of the above. b. and the bank. Bank deposits. 12. A check: a. b. c. the payee. The beginning and the ending balance of the depositor's checking account. e. the payee.a. Sales Returns and Allowances c. Are recorded in separate contra-revenue accounts. Checking. 13. b. c. the signers. 11. e. A list of outstanding checks. 14. Sales discounts b. the casher. Credit to Cash for $62. d. b. c 14. d 11. b 4.c 24 . b 13. a 2. a 8. d 3. d 5. d 7. e 12. a 9.1. d 10. b. Management must confront which of the following considerations when accounting for inventory: a. d.1. Damaged goods only. Specification identification method. If a period-end inventory amount is reported in error. Weighted-average method. LIFO method. Items to be included and their cost. c. 2. 3. When the supplier is responsible for freight charges. Cost of goods sold to be overstated and net income to be understated. 5. All of the above The understatement of the ending inventory balance causes: a. FIFO method. All goods owned by a company and held for sale. 25 . If the goods are shipped FOB destination. All goods on consignment. Cost of goods sold to be overstated and net income to be overstated. Costing (valuation) method. At any time in transit. b. e. d. e. c. e. Net income d. Cost of goods sold to be understated and net income to be overstated. When the purchaser is responsible for paying freight charges. 4. c. c. b. Cost of goods sold b. Current assets e. e. c. Cost of goods sold to be understated and net income to be understated. All goods in transit. During a period of steadily rising costs. it can cause a misstatement in: a. All of the above Goods in transit are included in a purchaser's inventory: a. Merchandise inventory includes: a. b. Average cost method. After the half-way point between the buyer and seller. 7. d. b. the inventory valuation method that yields the lowest reported net income is: a. Cost of goods sold to be overstated and net income to be correct. Gross profit c. Inventory system. d. $3. FIFO & LIFO b. $3. which includes a profit margin of 25%. FIFO. 26 . $3. b. Last-in. d. However. $3. A company had the purchases shown below during the current year. Weighted-average & Specific Identification c. Weighted-average inventory method. $3.700 d. what is the cost of the ending inventory? January February May September November a. Specific identification method. $2. First-out method. First-out method. there were 26 units remaining in ending inventory. LIFO. $2.000 e. & Weighted-average d. and 10 from November. These 26 units consisted of 2 from January. 6 from May.d.800 c. 11. $3. $2. The inventory valuation method that identifies the invoice cost of each item in ending inventory to determine the cost assigned to that inventory is the: a. 10. LIFO. the selling price has fallen to $15 per unit.600 c. This company's current inventory consists of 200 units purchased at $16 per unit. e.200 The cost flow assumptions are: a. 9. Weighted-average.960 d.550 b. & Specific Identification e. All of the above. Using the specific identification method. Use of lower of cost or market. Calculate the value of this company's inventory at the lower of cost or market. $3. FIFO. a.640 A company normally sells its product for $20 per unit.500 b. FIFO. First-in. On December 31.280 e. LIFO. & Specific Identification 10 units @ $120 20 units @ $130 15 units @ $140 12 units @ $150 10 units @ $160 8. Replacement cost has now fallen to $13 per unit. 4 from September. c. 4 from February. e 4. b 11. e 8.1. d 9. a 7. e 5. b 3. c 27 . b 10. a 2. Inventory Error Understates beginning inventory Understates ending inventory Overstates beginning inventory Overstates ending inventory Cost of Goods Sold Net Income 28 .Evaluate each (separate) inventory error and determine whether it overstates or understates each item. Inventory Error Understates beginning inventory Understates ending inventory Overstates beginning inventory Overstates ending inventory Cost of Goods Sold Understated Overstated Overstated Understated Net Income Overstated Understated Understated Overstated 29 . and (b) Inventory applied separately to each product.A company reported the following data related to its ending inventory:: Product 849 842 847 860 Units 100 75 60 40 Cost $10 16 14 16 Market $11 14 13 20 Calculate the lower-of-cost-or-market on the: (a) Inventory as a whole. 30 . 470 31 .100 1.680 $1.000 1. 3.050 780 800 $3.200 840 640 $3.050 780 640 $3.000 1.470 a. 3.680 b.Product 849 842 847 860 Units on Hand Per Unit Cost Market Total Cost Total Market LCM by Product 100 75 60 40 $10 16 14 16 $11 14 13 20 $1.730 $1. Determine the costs assigned to cost of goods sold and ending inventory using (a) FIFO and (b) LIFO. 14 Jul. 32 .750 $2.000 17.700 Units $33. Compute the gross margin for each method.250 9.500 Smith uses a perpetual inventory system.Smith Company reported the following current-year data for its only product: Jan. 1 Mar. 10 Mar. 30 Oct. 26 Units Available Cost of Goods Available for Sale Smith resold its products at $40 per unit on the following dates: Jan.000 5. 15 Oct. 5 Total Sales Sales Sales Sales 100 units 150 units 310 units 560 units Beginning Inventory Purchase Purchase Purchase 200 Units @ $10 350 Units @ $15 450 Units @ $20 700 Units @ $25 1. Solution: 33 . 4.000 note for the depositor. 9.Identify whether each of the following items 1 through 10 affects the bank side or the book side of a bank reconciliation. 5.58. The bank collected a $1. 34 . _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ 1.80. The bank printed checks for the depositor for a fee. The company properly wrote the check for $95. Bank debit memorandum Bank credit memorandum 10. 2. 8. Bank service charges Outstanding Checks Deposits in transit NSF check Inerest on a checking account The bank incorrectly recorded a check for $9. 6. 3. 7. Book 9. Book 8. Book 5. Book 4.Book 1. Bank 3. Book 10. Book 7. Bank 2. Bank 6. 35 . On October 15.A company established a $1. The contents of the petty cash fund at the time of the October 15 replenishment were: Currency and coins Petty cash receipts for: Transportation-in for inventory Delivery expense Repairs to office equipment Postage Entertainment of customers Total $139 238 147 214 153 891 $1. the petty cash fund was replenished and increased to $1.250 in total.003 $112 Prepare the general journal entry to record both the reimbursement and the increase of the petty cash fund on October 15. 36 .000 petty cash fund by issuing a check to the custodian (petty cashier) on October 1. Merchandise Inventory Delivery Expense Repairs Expense Postage Expense Entertainment Expense Petty Cash Cash Over and Short Cash 139 238 147 214 153 250 3 1.138 37 . 250 were placed in the bank's night depository after banking hours on that date and this amount did not appear on the September 30 bank statement. Required: 1. The bank charged the company's account a $25 processing fee. d. a collection fee of $25 was deducted by the bank. showed a cash balance of $1. drawn on another company.145.350. A customer's note for $900 was collected by the bank. Included with the canceled checks was a check for $275. A customer's check for $100 marked NSF was returned to Brown Company by the bank. A $15 debit memorandum for checks printed by the bank was included with the canceled checks. The September 30 cash receipts. Prepare a bank reconciliation as of September 30. Outstanding checks amounted to $1.Brown Company's bank statement for September 30. b. a. 38 . Inc. e. $1. The following information was also available as of September 30. f. Prepare any necessary adjusting journal entries necessary as a result of the bank reconciliation. Browne. 2. c. the company's Cash account in its general ledger showed a $995 debit balance. 250 275 $2.Part 1: BROWN COMPANY Bank Reconciliation September 30 Bank Statement Balance Add: Deposit of 9/30 Bank error 1.870 $1.145 Deduct: NSF check processing fee Bank service charge Adjusted Bank Balance $1.Solution .Part 2: Cash Miscellaneous Expense Notes Receivable Accounts Receivable Cash Miscellaneous Expense Cash 15 15 125 125 875 25 900 39 .730 Adjusted Book Balance 125 15 $1.875 Deduct: Outstanding checks 1.350 Book Cash Balance Add: Proceeds of note less collection fee 875 $995 Solution .730 $1. If the company uses the first-in. first-out method and the perpetual method. what would be the cost of the ending inventory? 40 .A company made the following merchandise purchases and sales during the month of July: July 1 July 5 July 9 July 14 July 20 July 30 Purchased Purchased Sold Purchased Sold Purchased 380 units @ 270 units @ 500 units @ 300 units @ 250 units @ 250 units @ $15 each $20 each $55 each $24 each $55 each $30 each There was no beginning inventory. 300 07/09 07/14 300 $24 $7.800 $4.200 $20 $20 24 07/20 07/30 250 $30 $7.700 $5.000 2.000 7.400 200 200 250 450 Balance Cost $15 $15 20 Total $5.500 $12.700 2.000 $3.500 $24 $24 30 41 .800 7.Purchases Date 07/01 07/05 Units 380 270 Cost $15 $20 Total $5.400 150 150 300 450 150 100 $20 24 $3.700 $5.200 $10.700 5.200 $4.400 Units Sales Cost Total Units 380 380 270 650 380 120 $15 20 $5.100 $3.400 $11. ......... 20............ Stringer uses a perpetual inventory system...000 Oct....... 20 Accounts Receivable ................................................................................................ 15........... 20... 500 Cash .......500 and paid balance due for merchandise purchased on October 8............................................... Credit terms: 2/10.............000 Accounts Payable ............. 4................................................................................ 2............................ 25.........Prepare the necessary general journal entries for the month of May for Stringer Company for each situation given below.....................400 Cash .................................... 15 Accounts Payable ..........000 Oct......000 Inventory ..................................................................................................000 for merchandise returned by Adder from the sale on October 20...................................... 25 Issued Credit Memo No........................ 12............................................................................................................ 22 Purchased a 2-year insurance policy for $4...000 Rent Expense.......... 29 Purchased office equipment for $15............. $2.................................... 20 Sold merchandise for $20....... 12.............................................................000 Sales .................. 5 Paid operating expenses as follows: $4......................000 42 ....................000 paying $4.......................................................... 8 Purchased merchandise for $25......500 Merchandise Inventory ...000 Rent Expense....... Oct............................................ 2..........000 to Adder Company on account.............. 25..... Oct...............................000 Notes Payable ……...025 Oct.......................................................................................................... Oct......... 4........................................................... 6............... 4.....000 Merchandise Inventory ........000 Merchandise Inventory . 3811 to Adder Company for $2..... 25 Sales Returns and Allowances ..............000 Accounts Receivable .........000 in cash and signing a 3-month....................... 3................................ Oct................. Credit terms: 2/10......................... 21.. 8 Oct...............000..... The cost of the merchandise sold was $12.000 on account................ Oct.. 29 Office Equipment .......... 2..... The cost of the merchandise returned was $1................000 Utilities Expense................ 5 Salaries Expense. Oct............. 1.......................................000 Cost of Goods Sold ........................ 25.....025 Cost of Goods Sold ............................ n/30.. Oct...............................................000 Cash ....................400 cash......... Oct.......................... 22 Prepaid Insurance .. n/30.........400 Oct...................... 1..................... The company takes all discounts to which it is entitled.....930 Cash ................. 11% note for the remainder....... 15 Returned defective merchandise with a cost of $3........................025..................................................................... 11.......... $500 Utilities Expense................070 Oct... 4..000 Salaries Expense....................