ACCT 211 Connect Homework Chapter 4 Problems Liberty University Solution

Question 1

Prepare journal entries to record the following merchandising transactions of Cabela’s, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable—Boden.)

Question 2

Prepare journal entries to record the following merchandising transactions of Lowe’s, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on August 1 in Accounts Payable—Aron.)

Question 3

Valley Company’s adjusted trial balance on August 31, 2017, its fiscal year-end, follows.

On August 31, 2016, merchandise inventory was $27,438. Supplementary records of merchandising activities for the year ended August 31, 2017, reveal the following itemized costs.

1. Compute the company’s net sales for the year.

2. Compute the company’s total cost of merchandise purchased for the year.

3. Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses.

4. Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses.

Question 4

Valley Company’s adjusted trial balance on August 31, 2017, its fiscal year-end, follows.

On August 31, 2016, merchandise inventory was $25,600. Supplementary records of merchandising activities for the year ended August 31, 2017, reveal the following itemized costs.

1. Prepare closing entries as of August 31, 2017 (the perpetual inventory system is used).

Question 5

The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company.

Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system.

Additional Information:

a.

Store supplies still available at fiscal year-end amount to $2,550.

b.

Expired insurance, an administrative expense, for the fiscal year is $1,700.

c.

Depreciation expense on store equipment, a selling expense, is $1,525 for the fiscal year.

d.

To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,800 of inventory is still available at fiscal year-end.

1. Using the above information prepare adjusting journal entries:

2. Prepare a multiple-step income statement for fiscal year 2017.

3. Prepare a single-step income statement for fiscal year 2017.

Question 6

4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2017.