The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2017, unadjusted trial balance of Emiko Co.. Emiko Co. uses a perpetual inventory system.

Exercise 4-10 Preparing adjusting and closing entries for a merchandiser LO P3

The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2017, unadjusted trial balance of Emiko Co.. Emiko Co. uses a perpetual inventory system.

            Debit                 Credit
Merchandise inventory     $     30,500                
Prepaid selling expenses           5,700                
Dividends           34,000                
Sales                       $     533,000
Sales returns and allowances           17,700                
Sales discounts           5,100                
Cost of goods sold           214,000                
Sales salaries expense           49,000                
Utilities expense           15,500                
Selling expenses           36,500                
Administrative expenses           106,000                


Additional Information

Accrued sales salaries amount to $1,300. Prepaid selling expenses of $3,100 have expired. A physical count of year-end merchandise inventory shows $29,000 of goods still available.

(a) Use the above account balances along with the additional information, prepare the adjusting entries.




Explanation
(a)
Adjusting entry:
Inventory shrinkage = ($30,500 – $29,000) = $1,500.

(b) Use the above account balances along with the additional information, prepare the closing entries.




Explanation
(b)

Closing entries:
Cost of goods sold = ($214,000 + $1,500) = $215,500.
Sales salaries expense = ($49,000 + $1,300) = $50,300.
Selling expenses = ($36,500 + $3,100) = $39,600.


Thank you!

Following are the merchandising transactions for Dollar Store.

Exercise 4-9 Recording purchases, sales, returns, and shipping LO P1, P2

Following are the merchandising transactions for Dollar Store.

Nov.           1           Dollar Store purchases merchandise for $2,600 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.
            5           Dollar Store pays cash for the November 1 purchase.
            7           Dollar Store discovers and returns $250 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund.
            10           Dollar Store pays $130 cash for transportation costs for the November 1 purchase.
            13           Dollar Store sells merchandise for $2,808 with terms n/30. The cost of the merchandise is $1,404.
            16           Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $285 and cost $143; the items were not damaged and were returned to inventory.


Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.

Explanation

Nov.           7:           Returned goods for cash. $250 × (100% – 2%) = $245.


Thank you!

The following supplementary records summarize Tesla Company’s merchandising activities for year 2017 (it uses a perpetual inventory system).

Exercise 4-8 Inventory and cost of sales transactions in T-accounts LO P1, P2

The following supplementary records summarize Tesla Company’s merchandising activities for year 2017 (it uses a perpetual inventory system).

 
           
Cost of merchandise sold to customers in sales transactions     $     293,000
Merchandise inventory, December 31, 2016           42,544
Invoice cost of merchandise purchases, gross amount           300,384
Shrinkage determined on December 31, 2017           750
Cost of transportation-in           3,004
Cost of merchandise returned by customers and restored to inventory           1,950
Purchases discounts received           2,403
Purchases returns and allowances           3,500

 

Record the summarized activities in the T-accounts below.