Question 1:

Shown below are selected transactions of Konshocks, retail store that uses a
perpetual inventory system.
a.
b.
c.
d.
e.

Purchased merchandise on account.

Recognized the revenue from a sale of merchandise on account.
Recognized the COGS relating to the sale in (b).
Collected in cash the account receivable from the customer in (b).
Following the taking of a physical inventory at year end, made an
adjusting entry to record a normal amount of inventory shrinkage.

Question 2:
Ranns Supply uses a perpetual inventory system. On January 1, its inventory
account had a beginning balance of $6,450,000. Ranns engaged in the
following transactions during the year:
1. Purchased merchandise inventory for $9,500,000.
2. Generated net sales of $26,000,000.
3. Recorded inventory shrinkage of $10,000 after taking a physical inventory
at year-end.
4. Reported gross profit for the year of $15,000,000 in its income statement.
a. At what amount was Cost of Goods Sold reported in the company's yearend income statement?
b. At what amount was Merchandise Inventory reported in the company's
year-end balance sheet?
c. Immediately prior to recording inventory shrinkage at the end of the year,
what was the balance of the Cost of Goods Sold and Merchandise Inventory
account?

Question 3:
Claypool Hardware is the only hardware store in a remote area of northern
Minnesota. Some of Claypool's transactions during the current year are as
follows:
Nov. 5 Sold lumber on account to Bemidiji Construction $13,390. The
inventory subsidiary ledger shows the cost of this merchandise was $9,105.
Nov.9 Purchased tools on account from Owatonna Tool Company $3,800.
Dec.5 Collected in cash the $13,390 account receivable from Bemidji
Construction.
Dec.9 Paid the $3,800 owed to Owatonna Tool Company.
Dec.31 Claypool's personnel counted the inventory on hand and determined
its cost to be $182,080. The accounting records,however, indicate inventory
of $183,790 and a cost of goods sold of $695,222. The physical count of the
invetory was observed by the company's auditors and is considered correct.
a. Prepare journal entries to record these transactions and events in the
accounting records of Claypool Hardware. (The company uses a perpetual
inventory system)
b. Prepare a partial income statement showing the company's gross profit for
the year. (Net Sales for the year amount to $1,024,900)
C. Claypool purchases merchandise inventory at the same time wholesale
prices as other hardware stores. Due to its remote location, however, the
company must pay between $18,000 and $20,000 per year in extra
transportation charges to receive delivery of merchandise. (These additional
charges are included in the amount shown as cost of goods sold.)
Assume that an index of key business ratios in your library shows hardware
stores of Claypool's approximate size (in total assets) average net sales of $1
million per year and a gross profit margin of 25%. Is Claypool able to pass its
extra transportation costs on to its customers? Does the business appear to
suffer or benefit finacially from its remote location? Explain the reasoning
and support your conclusions with specific accounting data comparing the
operations of Claypool Hardware with the industry averages.

Question 4:
Hendrys boutique is a retail clothing store for women. The store operates
out of a rented building in Storm Lakes, Iowa. Shown below is the stores
adjusted year end trial balance dated December 31, 2009.
Instructions:
Prepare an income
statement for Hendrys
Boutique.

Question 5:

Question 6:

Question 7:

Question 8:
Pemberton Products uses a periodic inventory system. The companys
records show the beginning inventory of PH4 oil filters on January 1 and the
purchases of this item during the current year to be as follows:
Jan.
Feb.
Apr.
May
Nov.

1 Beginning inventory 9 units @ $3.00 $ 27.00

23 Purchase 12 units @ $3.50 42.00
20 Purchase 30 units @ $3.80 114.00
4 Purchase 40 units @ $4.00 160.00
30 Purchase 19 units @ $5.00 95.00
Totals 110 units
$ 438.00

A physical count indicates 20 units in inventory at year-end.

Determine the cost of the ending inventory on the basis of each of the
following methods of inventory valuation. 1. Average Cost, 2. FIFO, 3. LIFO

Question 9:

Question 10: