Appendix 5 B Worksheet for a Merchandising Business

Appendix 5 B: Worksheet for a Merchandising Business Chapter 5 1 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Learning Objectives Prepare worksheets for a merchandiser 2 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Worksheet for a Merchandising Business Similar to the worksheet for a service business New accounts Inventory Sales revenue Cost of goods sold Procedures are the same as for a service business Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Worksheet for a Merchandising Business Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Beach Day Coolers’ trial balance as of December 31, 2012 is provided. 1. Complete the accounting worksheet for the year ended December 31, 2012. Key adjusting entries by letter. 2. Prepare the multi-step income statement, statement of owner’s equity, and balance sheet for the year. 3. Prepare closing entries for the year. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

TRIAL BALANCE ACCOUNT TITLE DEBIT CREDIT DEBIT Cash Accounts receivable Inventory $2, 800 10, 300 72, 000 Prepaid rent Equipment Accumulated depreciation Accounts payable Salary payable Note payable, long term Common Stock Retained earnings Dividends Sales revenue Cost of goods sold Salary expense Rent expense Utilities expense Depreciation expense Interest expense 3, 600 23, 900 (a) 2, 100 $7, 000 $2, 800 10, 300 68, 500 1, 500 23, 900 (c) 1, 200 36, 600 $11, 900 9, 600 1, 200 20, 400 9, 900 48, 500 36, 600 191, 000 66, 000 46, 700 14, 300 6, 800 0 3, 400 36, 600 191, 000 (d) 3, 500 (c) 1, 200 (a) 2, 100 (b) 4, 900 $11, 700 BALANCE SHEET $2, 800 10, 300 68, 500 (b) 4, 900 9, 600 0 20, 400 9, 900 48, 500 INCOME STATEMENT CREDIT DEBIT CREDIT (d) 3, 500 $286, 400 Net income ADJUSTMENTS ADJUSTED TRIAL BALANCE $191, 000 69, 500 47, 900 16, 400 6, 800 4, 900 3, 400 $11, 700 $292, 500 $148, 900 $191, 000 $143, 600 $101, 500 $42, 100 $191, 000 $143, 600 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Beach Day Coolers, Income Statement Year Ended December 31, 2012 Revenue: Sales revenue Cost of goods sold Gross profit Operating expenses: Salary expense Rent expense Utilities expense Depreciation expense Operating income Other revenue (expenses): Interest expense Net income $191, 000 _ 69, 500 $ 121, 500 $47, 900 16, 400 6, 800 _4, 900 3, 400 _76, 000 45, 500 __(3, 400) $ 42, 100 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Beach Day Coolers, Inc. Statement of Retained Earnings Year Ended December 31, 2012 Retained earnings, January 1, 2012 $ 48, 500 Net income 42, 100 90, 600 Dividends (36, 600) Retained earnings, December 31, 2012 $54, 000 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Beach Day Coolers, Inc. Balance Sheet December 31, 2012 Assets Current assets: Cash Accounts receivable Inventory Prepaid rent Total current assets Plant assets: Equipment Less: Accumulated depreciation Total assets $ 2, 800 10, 300 68, 500 __1, 500 83, 100 $23, 900 11, 900 _12, 000 $95, 100 Liabilities Current liabilities: Accounts payable Salary payable Total current liabilities Long term liabilities: Note payable, long term Total liabilities Stockholders' Equity Common stock Retained earnings Total stockholders’ equity Total liabilities and stockholders’ equity $ 9, 600 _1, 200 10, 800 20, 400 $ 31, 200 9, 900 _54, 000 _63, 900 $95, 100 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Dec 31 Sales revenue Income summary 191, 000 31 Income summary Cost of goods sold 148, 900 191, 000 69, 500 Salary expense Rent expense Utilities expense Interest expense Depreciation expense 31 Income summary ($191, 000 − $148, 900) Retained earnings 31 Retained earnings Dividends 47, 900 16, 400 6, 800 3, 400 4, 900 42, 100 36, 600 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Appendix Summary The worksheet of a merchandiser is similar to the worksheet for a service business. The main new account is the Inventory account, which must be adjusted based on a physical count. The merchandiser’s worksheet carries the other new merchandising accounts (Sales revenue, Cost of goods sold, etc). Worksheet procedures are the same as for a service business. 11 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

12 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. 13 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall.