Accounting 25th Edition Solution
(Download complete and 100% accurate work written as per
requirements)
Topic: _________________
Student Name: __________
Course Title: ____________
Instructor: ______________
Date of submission: _______
For any problem feel free to message me on “Stuvia”
Complete Answer (Next Page)
CHAPTER 6
ACCOUNTING FOR MERCHANDISING BUSINESSES
6-1
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, DISCUSSION QUESTIONS
1. Merchandising businesses acquire merchandise for resale to customers. It is the selling of
merchandise, instead of a service, that makes the activities of a merchandising business
different from the activities of a service business.
2. Yes. Gross profit is the excess of (net) sales over cost of merchandise sold. A net loss arises
when operating expenses exceed gross profit. Therefore, a business can earn a gross profit but
incur operating expenses in excess of this gross profit and end up with a net loss.
3. The date of sale as shown by the date of the invoice or bill.
4. a. 1% discount allowed if paid within 15 days of date of invoice; entire amount of invoice
due within 60 days of date of invoice.
b. Payment due within 30 days of date of invoice.
c. Payment due by the end of the month in which the sale was made.
5. Sales to customers who use MasterCard or VISA cards are recorded as cash sales.
6. a. A credit memo issued by the seller of merchandise indicates the amount for which the
buyer’s account is to be credited (credit to Accounts Receivable) and the reason for the
sales return or allowance.
b. A debit memo issued by the buyer of merchandise indicates the amount for which the
seller’s account is to be debited (debit to Accounts Payable) and the reason for the
purchases return or allowance.
7. a. The buyer
b. The seller
8. Examples of such accounts include the following: Sales, Sales Discounts, Sales Returns and
Allowances, Cost of Merchandise Sold, Merchandise Inventory.
9. Cost of Merchandise Sold would be debited; Merchandise Inventory would be credited.
10. Loss from Merchandise Inventory Shrinkage would be debited.
6-2
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 6 Accounting for Merchandising Businesses
PRACTICE EXERCISES
PE 6–1A
a. $700,000 ($450,000 + $1,350,000 – $1,100,000)
PE 6–1B
a. $126,000 ($18,300 + $295,700 – $188,000)
PE 6–2A
a. $8,526. Purchase of $12,650 less the return of $3,950 less the discount of
$174 [($12,650 – $3,950) × 2%)].
b. Merchandise Inventory
PE 6–2B
a. $56,925. Purchase of $65,000 less the return of $7,500 less the discount of
$575 [($65,000 – $7,500) × 1%].
b. Accounts Payable
PE 6–3A
a. Accounts Receivable 41,100
Sales 41,100
Cost of Merchandise Sold 26,750
Merchandise Inventory 26,750
b. Cash 40,278
Sales Discounts 822
Accounts Receivable 41,100
PE 6–3B
a. Accounts Receivable 92,500
Sales 92,500
Cost of Merchandise Sold 55,500
Merchandise Inventory 55,500
b. Cash 91,575
Sales Discounts 925
Accounts Receivable 92,500
6-3
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 6 Accounting for Merchandising Businesses
PE 6–4A
a. $161,400. Purchase of $180,000 less return of $20,000 less the discount of
$1,600 [($180,000 – $20,000) × 1%] plus $3,000 of shipping.
b. $77,420. Purchase of $88,000 less return of $9,000 less the discount of
$1,580 [($88,000 – $9,000) × 2%].
PE 6–4B
a. $31,680. Purchase of $36,000 less return of $4,000 less the discount of
$320 [($36,000 – $4,000) × 1%].
b. $42,025. Purchase of $44,900 less return of $2,400 less the discount of
$850 [($44,900 – $2,400) × 2%] plus $375 of shipping.
PE 6–5A
Sundance Co. journal entries:
Cash ($16,800 – $3,800 – $260) 12,740
Sales Discounts [($16,800 – $3,800) × 2%] 260
Accounts Receivable—Butterfield Co. ($16,800 – $3,800) 13,000
Butterfield Co. journal entries:
Accounts Payable—Sundance Co. ($16,800 – $3,800) 13,000
Merchandise Inventory [($16,800 – $3,800) × 2%] 260
Cash ($16,800 – $3,800 – $260) 12,740
PE 6–5B
Shore Co. journal entries:
Cash ($112,000 – $2,240 + $1,800) 111,560
Sales Discounts ($112,000 × 2%) 2,240
Accounts Receivable—Blue Star Co. ($112,000 + $1,800) 113,800
Blue Star Co. journal entries:
Accounts Payable—Shore Co. ($112,000 + $1,800) 113,800
Merchandise Inventory ($112,000 × 2%) 2,240
Cash ($112,000 – $2,240 + $1,800) 111,560
6-4
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
(Download complete and 100% accurate work written as per
requirements)
Topic: _________________
Student Name: __________
Course Title: ____________
Instructor: ______________
Date of submission: _______
For any problem feel free to message me on “Stuvia”
Complete Answer (Next Page)
CHAPTER 6
ACCOUNTING FOR MERCHANDISING BUSINESSES
6-1
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, DISCUSSION QUESTIONS
1. Merchandising businesses acquire merchandise for resale to customers. It is the selling of
merchandise, instead of a service, that makes the activities of a merchandising business
different from the activities of a service business.
2. Yes. Gross profit is the excess of (net) sales over cost of merchandise sold. A net loss arises
when operating expenses exceed gross profit. Therefore, a business can earn a gross profit but
incur operating expenses in excess of this gross profit and end up with a net loss.
3. The date of sale as shown by the date of the invoice or bill.
4. a. 1% discount allowed if paid within 15 days of date of invoice; entire amount of invoice
due within 60 days of date of invoice.
b. Payment due within 30 days of date of invoice.
c. Payment due by the end of the month in which the sale was made.
5. Sales to customers who use MasterCard or VISA cards are recorded as cash sales.
6. a. A credit memo issued by the seller of merchandise indicates the amount for which the
buyer’s account is to be credited (credit to Accounts Receivable) and the reason for the
sales return or allowance.
b. A debit memo issued by the buyer of merchandise indicates the amount for which the
seller’s account is to be debited (debit to Accounts Payable) and the reason for the
purchases return or allowance.
7. a. The buyer
b. The seller
8. Examples of such accounts include the following: Sales, Sales Discounts, Sales Returns and
Allowances, Cost of Merchandise Sold, Merchandise Inventory.
9. Cost of Merchandise Sold would be debited; Merchandise Inventory would be credited.
10. Loss from Merchandise Inventory Shrinkage would be debited.
6-2
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 6 Accounting for Merchandising Businesses
PRACTICE EXERCISES
PE 6–1A
a. $700,000 ($450,000 + $1,350,000 – $1,100,000)
PE 6–1B
a. $126,000 ($18,300 + $295,700 – $188,000)
PE 6–2A
a. $8,526. Purchase of $12,650 less the return of $3,950 less the discount of
$174 [($12,650 – $3,950) × 2%)].
b. Merchandise Inventory
PE 6–2B
a. $56,925. Purchase of $65,000 less the return of $7,500 less the discount of
$575 [($65,000 – $7,500) × 1%].
b. Accounts Payable
PE 6–3A
a. Accounts Receivable 41,100
Sales 41,100
Cost of Merchandise Sold 26,750
Merchandise Inventory 26,750
b. Cash 40,278
Sales Discounts 822
Accounts Receivable 41,100
PE 6–3B
a. Accounts Receivable 92,500
Sales 92,500
Cost of Merchandise Sold 55,500
Merchandise Inventory 55,500
b. Cash 91,575
Sales Discounts 925
Accounts Receivable 92,500
6-3
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 6 Accounting for Merchandising Businesses
PE 6–4A
a. $161,400. Purchase of $180,000 less return of $20,000 less the discount of
$1,600 [($180,000 – $20,000) × 1%] plus $3,000 of shipping.
b. $77,420. Purchase of $88,000 less return of $9,000 less the discount of
$1,580 [($88,000 – $9,000) × 2%].
PE 6–4B
a. $31,680. Purchase of $36,000 less return of $4,000 less the discount of
$320 [($36,000 – $4,000) × 1%].
b. $42,025. Purchase of $44,900 less return of $2,400 less the discount of
$850 [($44,900 – $2,400) × 2%] plus $375 of shipping.
PE 6–5A
Sundance Co. journal entries:
Cash ($16,800 – $3,800 – $260) 12,740
Sales Discounts [($16,800 – $3,800) × 2%] 260
Accounts Receivable—Butterfield Co. ($16,800 – $3,800) 13,000
Butterfield Co. journal entries:
Accounts Payable—Sundance Co. ($16,800 – $3,800) 13,000
Merchandise Inventory [($16,800 – $3,800) × 2%] 260
Cash ($16,800 – $3,800 – $260) 12,740
PE 6–5B
Shore Co. journal entries:
Cash ($112,000 – $2,240 + $1,800) 111,560
Sales Discounts ($112,000 × 2%) 2,240
Accounts Receivable—Blue Star Co. ($112,000 + $1,800) 113,800
Blue Star Co. journal entries:
Accounts Payable—Shore Co. ($112,000 + $1,800) 113,800
Merchandise Inventory ($112,000 × 2%) 2,240
Cash ($112,000 – $2,240 + $1,800) 111,560
6-4
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
