Chapter 5 Accounting for Merchandising Businesses
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for the inventory shrinkage for Road Runner Tire Co. for the year ended December 31, 2014.
EX 5-27 Closing the accounts of a merchandiser
OBJ. 4
From the following list, identify the accounts that should be closed to Income Summary at the end of the fiscal year under a perpetual inventory system: a Accounts Payable,
b Advertising Expense, c Cost of Merchandise Sold, d Dividends, e Merchandise Inventory, f Sales, g Sales Discounts, h Sales Returns and Allowances, i Supplies,
j Supplies Expense, k Wages Payable.
EX 5-28 Closing entries; net income
OBJ. 4
Based on the data presented in Exercise 5-23, journalize the closing entries.
EX 5-29 Closing entries
OBJ. 4
On October 31, 2014, the balances of the accounts appearing in the ledger of Acorn Interiors Company, a furniture wholesaler, are as follows:
Accumulated Depr.—Building 142,000
Notes Payable 125,000
Administrative Expenses 300,000
Retained Earnings 105,000
Building 446,000
Sales 1,375,000
Capital Stock 75,000
Sales Discounts 20,000
Cash 60,000
Sales Returns and Allow. 13,000
Cost of Merchandise Sold 650,000
Sales Tax Payable 3,000
Dividends 25,000
Selling Expenses 140,000
Interest Expense 10,000
Store Supplies 23,000
Merchandise Inventory 126,000
Store Supplies Expense 12,000
Prepare the October 31, 2014, closing entries for Acorn Interiors Company.
EX 5-30 Ratio of net sales to assets
OBJ. 5
The Home Depot reported the following data in millions in its recent financial statements:
Year 2 Year 1
Net sales 67,997
66,176 Total assets at the end of the year
40,125 40,877
Total assets at the beginning of the year 40,877
41,164
a. Determine the ratio of net sales to assets for The Home Depot for Year 2 and Year 1. Round to two decimal places.
b. What conclusions can be drawn from these ratios concerning the trend in the ability of The Home Depot to effectively use its assets to generate sales?
EX 5-31 Ratio of net sales to assets
OBJ. 5
Kroger , a national supermarket chain, reported the following data in millions in its fi-
nancial statements for a recent year:
Total revenue 82,189
Total assets at end of year 23,505
Total assets at beginning of year 23,126
a. Compute the ratio of net sales to assets. Round to two decimal places. b.
Tiffany Co. is a large North American retailer of jewelry, with a ratio of net
sales to assets of 0.85. Why would Tiffany’s ratio of net sales to assets be lower than that of Kroger?
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Chapter 5 Accounting for Merchandising Businesses
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