Presented below is information related to Gonzales Corporation the month of January 2020.

$$\begin{array}{lrrllrrr} \text{Cost of goods sold}&&\$208,000&\hspace{10pt}&\text{Salaries and wages expense}&&\$61,000\\ \text{Delivery expense}&&7,000&\hspace{10pt}&\text{Sales discounts}&&8,000\\ \text{Insurance expense}&&12,000&\hspace{10pt}&\text{Sales returns and allowances}&&13,000\\ \text{Rent expense}&&20,000&\hspace{10pt}&\text{Sales revenue}&&350,000\\ \end{array}$$

Prepare the necessary closing entries.

Presented below is information related to Jerrold Corporation for the current year.

$$\begin{array}{lr} \text{Total goods available for sale}&\$ 2,100,000 \\ \text{Sales}&2,300,000 \end{array}$$

Compute the ending inventory, assuming that (b) gross profit is 60% of cost

Presented below is financial information for two different companies.

$$\begin{array}{lccc} \underline{\text{}}&\underline{\hspace{10pt}\text{Alatorre Company}\hspace{10pt}}&\underline{\hspace{10pt}\text{Eduardo Comapny}\hspace{10pt}}\\ \text{Sales revenue}\hspace{5pt}&\$\hspace{5pt}9,000&\text{(d)}\\ \text{Sales returns and allowances}&\text{(a)}&\$\hspace{5pt}5,000\\ \text{Net sales}&81,000&95,000\\ \text{Cost of goods sold}&56,000&\text{(e)}\\ \text{Gross profit}&\text{(b)}&38,000\\ \text{Operating expenses}&15,000&23,000\\ \text{Net income}&\text{(c)}&15,000\\ \end{array}$$

Compute the missing amounts.

Presented below are a number of business transactions that occurred during the current year for Gonzales, Inc.

In each of the situations, discuss the appropriateness of the journal entries in terms of generally accepted accounting principles. (c) The company is being sued for $500,000 by a customer who claims damages for personal injury apparently caused by a defective product. Company attorneys feel extremely confident that the company will have no liability for damages resulting from the situation. Nevertheless, the company decides to make the following entry.

$$\begin{array}{lr} \text{Loss from Lawsuit } &500,000\\ \text{Liability for Lawsuit } &&500,000 \end{array}$$

Presented below is information for Kaila Company for the month of March 2017.

$$\begin{array}{lrlr} \text{Cost of goods sold} & \$215,000 & \text{Rent expense} & \$\hspace{5pt} 30,000\\ \text{Freight-out} & 7,000 & \text{Sales discounts} & 8,000\\ \text{Insurance expense} & 6,000 & \text{Sales returns and allowances } &13,000\\ \text{Salaries and wages expense} & 58,000 & \text{Sales revenue} & 380,000\\ \end{array}$$

Instruction

Compute the gross profit rate.

Presented below is information for Zhou Co. for the month of January 2014.

      Cost of goods sold          $212,000     Rent expense$32,000 
      Freight-out                    7,000     Sales discounts                8,000 
      Insurance expense             12,000     Sales returns and allowances  20,000 
      Salaries and wages expense    60,000     Sales revenue                370,000

Instructions

(a) Prepare an income statement using the format presented on page 245. Assume a 25% tax rate.

(b) Calculate the profit margin and the gross profit rate.

Financial information is presented below:

Operating expenses $49,000

Sales revenue$217,000

Cost of goods sold $149,000

The profit margin ratio would be

a. 0.69

b. 0.31

c. 0.91

d. 0.09

The ledger of Duggan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.

$$\begin{array} {lrr} \textbf{}&\textbf{Debit}&\textbf{Credit}\\ \\ \text{Prepaid Insurance}\hspace{105pt} \ &\ \text{\$\hspace{10pt}3,600}&\\ \text{Supplies}\hspace{40pt}& \text{2,800}&\\ \text{Equipment}\hspace{81pt}& \text{25,000}&\\ \text{Accumulated Depreciation-Equipment}\hspace{52pt} && \text{\$\hspace{10pt}8,400} &\\ \text{Notes Payable}\hspace{59pt}&& \text{20,000}&\\ \text{Unearned Rent Revenue}\hspace{59pt}&& \text{9,300}&\\ \text{Rent Revenue}\hspace{65pt}&& \text{60,000}&\\ \text{Interest Expense}\hspace{59pt}& \text{-0-}&\\ \text{Salaries and Wages Expense}\hspace{65pt}& \text{14,000}&\\ \end{array}$$

An analysis of the accounts shows the following.

1. The equipment depreciates $250 per month.

2. One-third of the unearned rent was recognized as revenue during the quarter.

3. Interest of$500 is accrued on the notes payable.

4. Supplies on hand total $850.

5. Insurance expires at the rate of$300 per month.

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are Depreciation Expense. Insurance Expense, Interest Payable, and Supplies Expense. (Omit explanations.)

Greco Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows.

$$\begin{array}{c} \textbf{GRECO RESORT}\\ \textbf{TRIAL BALANCE}\\ \textbf{AUGUST 31, 2017} \end{array}$$

$$\begin{array}{lrr} \\\hline{\text{}}&\text{Debit }&\text{Credit}\\\hline \text{Cash}&\text{\$\hspace{10pt}19,600}\\ \text{Prepaid Insurance}&\text{4,500}\\ \text{Supplies}&\text{2,600}\\ \text{Land}&\text{20,000}\\ \text{Buildings}&\text{120,000}\\ \text{Equipment}&\text{16,000}\\ \text{Accounts Payable}&&\text{\$\hspace{15pt}4,500}\\ \text{Unearned Rent Revenue}&&\text{4,600}\\ \text{Mortgage Payable}&&\text{60,000}\\ \text{Common Stock}&&\text{91,000}\\ \text{Retained Earnings}&&\text{9,000}\\ \text{Dividends}&\text{5,000}\\ \text{Rent Revenue}&&\text{76,200}\\ \text{Salaries and Wages Expense}&\text{44,800}\\ \text{Utilities Expenses}&\text{9,200}\\ \text{Maintenance and Repairs Expense}&\text{\underline{\hspace{20pt}3,600}}&\text{\underline{\hspace{43pt}}}\\ \text{}&\underline{\underline{\$\hspace{5pt}\text{245,300}}}&\underline{\underline{\$\hspace{5pt}\text{245,300}}}\\ \end{array}$$

1. The balance in prepaid insurance is a one-year premium paid on June 1, 2017.
2. An inventory count on August 31 shows $450 of supplies on hand.
3. Annual depreciation rates are buildings (4%) and equipment (10%). Salvage value is estimated to be 10% of cost.
4. Unearned Rent Revenue of$3,800 was earned prior to August 31.
5. Salaries of $375 were unpaid at August 31.
6. Rentals of$800 were due from tenants at August 31.
7. The mortgage interest rate is 8% per year.

Instructions

• a. Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31. (Omit explanations.)
• b. Prepare an adjusted trial balance on August 31.

The adjusted trial balance of Lopez Company shows the following data pertaining to sales at the end of its fiscal year. October 31, 2020: Sales Revenue $800,000, Delivery Expense$12,000, Sales Returns and Allowances $24,000, and Sales Discounts$15,000.

Instructions

a. Prepare the revenues section of the income statement.

b. Prepare separate closing entries for (1) sales and (2) the contra accounts to sales.

Greco Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows.

$$\begin{array}{ c } \hspace{15pt}\textbf{Greco Resort}&\\ \hspace{15pt}\textbf{Trial Balance}&\\ \hspace{15pt}\textbf{August 31, 2020} \end{array}\\$$

$$\begin{array} {lrr}\hline \textbf{}&\textbf{Debit}&\textbf{Credit}\\ \hline \text{Cash}\hspace{40pt}& \text{\$19,600}&\\ \text{Prepaid Insurance}\hspace{52pt} & \text{4,500} &\\ \text{Supplies}\hspace{40pt}& \text{2,600}&\\ \text{Land}\hspace{52pt} & \text{20,000} &\\ \text{Buildings}\hspace{40pt}& \text{120,000}&\\ \text{Equipment}\hspace{52pt}& \text{16,000} &\\ \text{Accounts Payable}\hspace{65pt} && \text{\$4,500}&\\ \text{Unearned Rent Revenue}\hspace{65pt} && \text{4,600}&\\ \text{Mortgage Payable}\hspace{65pt} && \text{60,0004}&\\ \text{Common Stock}\hspace{60pt}&& \text{91,000}&\\ \text{Retained Earnings}\hspace{60pt}&& \text{9,000}&\\ \text{Dividends}\hspace{60pt}& \text{5,000}&\\ \text{Rent Revenue}\hspace{71pt}&&\ \text{76,200}&\\ \text{Salaries and Wages Expense}\hspace{50pt}&\ \text{44,800}&\\ \text{Utilities Expenses}\hspace{50pt}&\ \text{9,200}&\\ \text{Maintenance and Repairs Expense}\hspace{50pt}&\ \text{3,600}&\\\hline \textbf{}\hspace{100pt}& \textbf{\$245,300} &\ \textbf{\$245,300} \\\hline \hline \end{array}$$

Other data:

1. The balance in prepaid insurance is a one-year premium paid on June 1, 2020.

2. An inventory count on August 31 shows $450 of supplies on hand.

3. Annual depreciation rates are buildings (4%) and equipment (10%). Salvage value is estimated to be 10% of cost.

4. Unearned Rent Revenue of$3,800 was earned prior to August 31.

5. Salaries of $375 were unpaid at August 31.

6. Rentals of$800 were due from tenants at August 31. You sent

7. The mortgage interest rate is 8% per year.

Instructions

a. Journalize the adjusting entries on August 31 for the 3-month period June 1-August 31. (Omit explanations.)

b. Prepare an adjusted trial balance on August 31.

At the beginning of the current season on April 1, the ledger of Flint Hills Pro Shop showed Cash $2,500; Inventory$3,500; and Common Stock $6,000. The following transactions were completed during April 2014.

Apr.  5 Purchased golf bags, clubs, and balls on account from Akers Co.$1,500, terms 3/10, n/60.
      7 Paid freight on Akers purchase $80.
      9 Received credit from Akers Co. for merchandise returned$200.
     10 Sold merchandise on account to members $1,340, terms n/30. The merchandise sold had a cost of$820.
     12 Purchased golf shoes, sweaters, and other accessories on account from Palmer Sportswear $830, terms 1/10, n/30.
     14 Paid Akers Co. in full.
     17 Received credit from Palmer Sportswear for merchandise returned$30.
     20 Made sales on account to members $810, terms n/30. The cost of the merchandise sold was$550.
     21 Paid Palmer Sportswear in full.
     27 Granted an allowance to members for clothing that did not fit properly $80.
     30 Received payments on account from members$1,220.

The chart of accounts for the pro shop includes Cash, Accounts Receivable, Inventory, Accounts Payable, Common Stock, Sales Revenue, Sales Returns and Allowances, and Cost of Goods Sold.

Instructions

(a) Journalize the April transactions using a perpetual inventory system.

(b) Using T-accounts, enter the beginning balances in the ledger accounts and post the April transactions.

Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred.

Sept. 6  Purchased calculators from Dragoo Co. at a total cost of $1,650, terms n/30. 
      9 Paid freight of$50 on calculators purchased from Dragoo Co. 
      10  Returned calculators to Dragoo Co. for $66 credit because they did not meet specifications. 
      12 Sold calculators costing$520 for $690 to Fryer Book Store, terms n/30. 
      14  Granted credit of$45 to Fryer Book Store for the return of one calculator that was not ordered. The calculator cost $34. 
      20 Sold calculators costing$570 for $760 to Heasley Card Shop, terms n/30.

Instructions

Journalize the September transactions.

Brueser Company has the following account balances: Sales Revenue $195,000, Sales Discounts$2,000, Cost of Goods Sold $117,000, and Inventory$40,000. Prepare the entries to record the closing of these items to Income Summary.