Resource: Ch. 5–7 of Financial Accounting

Resource: Ch. 5–7 of Financial Accounting

Complete Exercises BE5–1, BE5–2, BE6-5, BE6-7, BE7-4, BE7-5, & BE7-6.

Submit as either a Microsoft® Excel® or a Microsoft® Word document

 

BE5-1
Presented here are the components in Korinek Company’s income statement.

   

Determine the missing amounts.

     

Sales                   Cost of                  Gross                   Operating                 Net

   

Revenue           Goods Sold              Profit                   Expenses            Income

   

$ 71,200                (b)                       $ 30,000                  (d)                      $12,100

   

$108,000           $70,000                        (c)                      (e)                       $29,500

   

(a)                    $71,900                      $109,600         $46,200                        (f )

     

BE5-2
Pocras Company buys merchandise on account from Wedell Company. The

   

selling price of the goods is $900 and the cost of the goods sold is $590. Both companies

   

use perpetual inventory systems. Journalize the transactions on the books of both

   

companies.

   

BE6-5
In its first month of operation, Moraine Company purchased 100 units of inventory

  

for $6, then 200 units for $7, and finally 140 units for $8. At the end of the month,

   

180 units remained. Compute the amount of phantom profit that would result if the company

   

used FIFO rather than LIFO. Explain why this amount is referred to as phantom

   

profit. The company uses the periodic method.

     

BE6-7
Olsson Video Center accumulates the following cost and market data at

   

December 31.

     

Inventory           Cost               Market

   

Categories        Data                   Data

   

Cameras           $12,500            $13,400

   

Camcorders        9,000              9,500

   

DVDs              13,000               12,200

   

Compute the lower-of-cost-or-market valuation for Olsson inventory.

     

BE7-4
Aldstadt Company has the following internal control procedures over cash receipts.

       

Identify the internal control principle that is applicable to each procedure.

   

(a) All over-the-counter receipts are registered on cash registers.

   

(b) All cashiers are bonded.

   

(c) Daily cash counts are made by cashier department supervisors.

   

(d) The duties of receiving cash, recording cash, and having custody of cash are assigned

   

to different individuals.

   

(e) Only cashiers may operate cash registers.

         

BE7-5
While examining cash receipts information, the accounting department determined

       

the following information: opening cash balance $150, cash on hand $1,125.74,

   

and cash sales per register tape $988.62. Prepare the required journal entry based upon

   

the cash count sheet.

     

BE7-6
Ndon Company has the following internal control procedures over cash disbursements.

       Identify the internal control principle that is applicable to each procedure.   

(a) Company checks are prenumbered.

   

(b) The bank statement is reconciled monthly by an internal auditor.