Work4Me. Algorithmic Version. Problem Eight. Accounting for Accounts Payable and Merchandise Inventory with Perpetual Inventory System

Transcription

1 Work4Me Algorithmic Version 1 st Web-Based Edition Problem Eight Accounting for Accounts Payable and Merchandise Inventory with Perpetual Inventory System Page 1

2 UPTIGHT TOOLS, INCORPORATED CHART OF ACCOUNTS Problem 8 ASSETS REVENUE 101 Cash 401 Tools and Accessory Sales 105 Accounts Receivable 402 Sales Returns and Allowances 109 Notes Receivable 113 Interest Receivable COST OF GOODS SOLD 115 Merchandise Inventory 121 Prepaid Insurance 501 Cost of Goods Sold 123 Prepaid Rent 125 Prepaid Advertising OPERATING EXPENSES 127 Store Supplies 129 Office Supplies 601 Salaries and Wages Expense 131 Store Equipment and Fixtures 602 Store Supplies Expense 132 Accum. Depre., Store Equip. and Fix. 603 Office Supplies Expense 135 Office Equipment 604 Advertising Expense 136 Accum. Depre., Office Equipment 606 Delivery Expense 139 Delivery Vehicles 608 Vehicle Operating Expense 140 Accum. Depre., Delivery Vehicles 610 Depre. Exp., Store Equip. and Fix. 150 Land 611 Depre. Exp., Office Equip. 612 Depre. Exp., Delivery Vehicles LIABILITIES 621 Rent Expense 622 Insurance Expense 201 Accounts Payable 623 Professional Services Expense 203 Short-Term Notes Payable 624 Electric and Gas Expense 205 Sales Tax Payable 625 Telephone Expense 209 Salaries & Wages Payable 626 Property Tax Expense 212 Dividends Payable 627 Bank Service Charges 215 Interest Payable 629 Miscellaneous Expense 218 Property Tax Payable 221 Revenue Received In Advance OTHER REVENUE 231 Income Taxes Payable 251 Long-Term Notes Payable 711 Interest Earned STOCKHOLDERS EQUITY OTHER EXPENSES 301 Common Stock 811 Interest Expense 305 Retained Earnings 821 Income Taxes Expense 310 Cash Dividends Declared INCOME SUMMARY 901 Income Summary Page 2

3 Uptight Tools, Inc. Customer List Customer Number Customer Alex Anderson Bob s Auto Repair Clinker s Plumbing Folsom School Dist Marshal Motors Kathy Taylor Robert Wise Ernie Young Uptight Tools, Inc. Vendor List Vendor Number Vendor Bart s Supply Boot Hill Tools Deadwood Equipment Goodman Freight, Inc Honker Brothers Locker and Sons, Inc Mosetti and Company Videcamper Saws Discounts: Vary Page 3

4 Problem 8 UPTIGHT TOOLS, INCORPORATED ACCOUNTING FOR ACCOUNTS PAYABLE AND MERCHANDISE INVENTORY WITH A PERPETUAL INVENTORY SYSTEM In Problem 8, Uptight Tools, Incorporated is purchasing merchandise (tools for inventory) as a wholesale distributor, direct from manufacturers or from large distributors. The management will attempt to pay all invoices in time to take advantage of every purchase discount extended by the sellers. This will lower the cost of the merchandise purchased and contribute to improved gross profit and net income totals. 1. Go to select Work4Me, and log in. Select Problem 8, Accounts Payable with Perpetual Inventory and click. 2. Print a copy of the beginning trial balance. Use the Chart of Accounts and the Vendor List for Uptight Tools, Incorporated, (page 3 ) to journalize, verify, and post the December sales and related transactions for Uptight Tools, Incorporated. TRANSACTIONS FOR DECEMBER 1-31 December 1 A check was issued for the balance owing to Goodman Freight, Inc., for transportation fees incurred for the delivery of merchandise from vendors using FOB shipping point terms. Check Number: Invoice Number: G5001. Vendor Number: Student Analysis Move the pointer to Journal/Ledgers/Statements, select Subsidiary Ledgers, select Accounts Payable Ledger, and then click on All Vendors and Print All Vendors. Check the Goodman Freight, Inc., account for amount of the invoice and the credit terms. ************************************************ December 2 Merchandise costing $12, was purchase on credit from Boot Hill Tools. Boot Hill Tools extends 2/10, n/30 terms and ships all merchandise FOB destination. Invoice Number: BH545. Vendor Number: Page 4

5 Transactions for December 1-31 continued December 3 A check was issued to Tucker Enterprises for the purchase of $11, worth of merchandise for cash. The goods are shipped FOB destination. Check Number: Invoice Number: T0101. Student Analysis December 9 Tools and parts were purchased on credit from Deadwood Equipment for $4, Deadwood Equipment extends cash terms of 2/10, n/30, and ships the merchandise FOB destination. Invoice Number: D3267. Vendor Number: December 10 A check was issued to pay the November 30 invoice from Videcamper Saws. The invoice had credit terms of 1/10, net/30. The Merchandise Inventory account (115) is credited for the amount of discounts earned. Check Number: Invoice Number: V1555. Vendor Number: Use your print out of All Vendors to verify the details of the Videcamper Saws account. December 11 A check was issued to Boot Hill Tools as payment in full of the December 1 invoice for $12, Terms of 2/10, n/30, are offered by Boot Hill Tools. Do not forget to account for the discount earned. Check Number: Invoice Number: BH545. Vendor Number: December 13 A Debit Memo was issued and merchandise listed at $1, was returned to Deadwood Equipment. The merchandise was purchased on December 9. Invoice Number: D3267. Debit Memo Number: DM303. Vendor Number: Page 5

6 Transactions for December 1-31 continued December 19 A check was issued to Deadwood Equipment for an invoice of December 9, less the debit memo of December 13 and the cash discount. Check Number: Invoice Number: D3267. Vendor Number: Student Analysis December 21 Tools and parts were purchased from Locker and Sons, Inc. at a list price of $8, Locker extends credit terms of 2/10, n/30. Shipping terms are FOB shipping point and the invoice shows an additional charge of $ for freight charges. Be sure to include the freight charges in the Merchandise Inventory account (115). Invoice Number: L3003. Vendor Number: December 28 Tools were purchased for $4, from Honker Brothers. The credit terms are Net 10 and the merchandise is shipped FOB destination. Invoice Number: HB876. Vendor Number: December 31 A check was issued to pay an invoice from Locker and Sons, Incorporated. Carefully check the original December 21 invoice for totals, credit terms, and shipping terms before making this final entry for December. Check Number: Invoice Number: L3003. Vendor Number: This Concludes the Transactions for Problem Eight: Accounts Payable with Perpetual Inventory Page 6

7 Now that you have completed entering the December transactions, it is time to check the accuracy of your work. 1. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, move down to the General Ledger selection and click. The completed Trial Balance will appear on the screen. Print the trial balance. 2. Move the pointer to Check Figures in the Menu Bar. Select Problem Check Figures and then Print the Check Figures for Problem Eight Accounts Payable with Perpetual Inventory. If Your Balances do not match the Correct Balances of the selected account totals in the Check Figures for Problem 8, you must correct the unmatched balances before answering the evaluation questions. Proceed to the instructions in Error Correction Procedures at the end of the manuals for Problem 1, Problem 2, or Problem 3. If Your Balances match the Correct Balances for the selected account totals in the Check Figures for Problem 8, then complete the instructions below, and answer the questions on the examination on the last page of this manual. 3. Print a Schedule of Accounts Payable 4. Print All Vendor Accounts 5. When all of the required documents have been printed, you have completed your computer work for Problem 8. Click on Log Out in the menu bar. From the PKL software Home Page you may make another selection or click on File and exit the system. 6. Using your printed documents, answer the questions to the examination on the next page. After you have filled in the answers, log in to Problem 8. Accounts Payable with Perpetual Inventory, move the pointer to Evaluations and complete Exam 8: Accounts Payable with Perpetual Inventory. You may print the examination to hand in to your professor or, if required, your examination to your professor. Page 7

8 ALGORITHMIC WORK4ME PROBLEM EIGHT ACCOUNTS PAYABLE PERPETUAL INVENTORY NAME CLASS DAY AND TIME DATE 1. The issuance of a debit memo for the return of merchandise to a vendor requires that the Sales Returns and Allowances account be debited. A) Yes B) No 2. A purchase of merchandise on credit requires that a credit entry to be recorded to the Accounts Payable account. A) Yes B) No 3. Cash terms of 2/10, 1/15, net 60 means that the balance of the invoice must be paid in full within 15 days of the invoice date to qualify for a 2 percent discount. A) Yes B) No 4. Cash terms of 3/10, net 30 means that the balance of the invoice must be paid within 10 days of the invoice date to qualify for the full discount. A) Yes B) No 5. If paid on time, what is the last day to pay the Honker Brothers invoice? A. January 7 B. December 7 C. January 5 D. January 6 E. None of the above 6. Can a purchases discount be earned if the Honker Brothers invoice is paid within 10 days of the invoice date? A. Yes B. No Page 8

9 7. What are the credit terms offered by Mosetti and Company? A. 2/10, n/30 B. net 30 C. 1/10, n/30 D. None of the above 8. The Mosetti and Company account balance is: A. not due to be paid B. due in 5 days C. past due D. none of the above 9. If the Deadwood Equipment Company balance, that is currently past due, had been paid on time, what would have been the reduction in the cost of inventory if the invoice had been paid within the discount period? 10. The Boot Hill Tools invoice of December 2 was paid on time to take the discount. What was the reduction in the cost of inventory for paying this invoice within the discount period? $ $ Page 9