College Accounting (Book Only): A Career Approach
13th Edition
ISBN: 9781337280570
Author: Scott, Cathy J.
Publisher: South-Western College Pub
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Chapter E, Problem 1P
Bay Book and Software has two sales departments: Book and Software. After recording and posting all adjustments, including the adjustments for merchandise inventory, the accountant prepared the adjusted
Merchandise inventories at the beginning of the year were as follows: Book Department, $53,410; Software Department, $23,839. The bases (and sources of figures) for apportioning expenses to the two departments are as follows (rounded to the nearest dollar):
- Sales Salary Expense (payroll register): Book Department, $45,559; Software Department, $35,629
- Advertising Expense (newspaper column inches): Book Department, 550 inches; Software Department, 450 inches
Depreciation Expense, Store Equipment (property and equipment ledger): Book Department, $7,851; Software Department, $2,682- Store Supplies Expense (requisitions): Book Department, $205; Software Department, $199
- Miscellaneous Selling Expense (volume of gross sales): Book Department, $240; Software Department, $110
- Rent Expense and Utilities Expense (floor space): Book Department, 9,000 square feet; Software Department, 7,000 square feet
Bad Debts Expense (volume of gross sales): Book Department, $1,029; Software Department, $441- Miscellaneous General Expense (volume of gross sales): Book Department, $364; Software Department, $156
Required
Prepare an income statement by department to show income from operations, as well as a nondepartmentalized income statement (using the Total columns) to show net income for the entire company.
Expert Solution & Answer
To determine
Prepare an income statement for B Book and Software by department, and non-departmentalized (total) income statement for the year ended December 31, 20--.
Explanation of Solution
Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
Prepare an income statement for B Book and Software by department, and non-departmentalized (total) income statement for the year ended December 31, 20--.
Table (1)
Conclusion
Thus, the income statement of B Book and Software for the year ended December 31, 20—reports income from operations of $42,599.50 for Book Department, and loss from operations of $6,947.50 for Software Department, and total net income of $34,444.00.
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Crane Company has the following merchandise account balances at its September 30 year end: Cost of goods sold $140,000, Sales $273,500, Delivery expense $2,100, Sales discounts $950, Merchandise inventory $22,000, Sales returns and allowances $3,200, Salaries expense $41,000, Supplies $2,700. Prepare the entries to close the appropriate accounts to the Income Summary account.
Riverbed Company had the following account balances at year-end: Cost of Goods Sold $62,380, Inventory $14,410, Utilities Expense $32,500, Sales Revenue $126,790, Sales Discounts $1,170, and Sales Returns and Allowances $1,700. A physical count of inventory determines that merchandise inventory on hand is $12,360. They use the perpetual inventory system.
(a)
Prepare the adjusting entry necessary as a result of the physical count. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
(b)
Prepare closing entries. (List all debit entries before credit entries. Credit account titles are automatically…
Chloe Company employs the perpetual inventory system. Cost of Goods Sold for the year before any adjustment is $275,450. The computer record shows the amount of ending inventory to be $55,382, while the physical count shows ending inventory to be $51,405. Record the adjustment into T accounts and then journalize the adjusting entry.
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College Accounting (Book Only): A Career Approach
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