At the beginning of June 2021, Beaman’s Distributing Company’s ledger showed Cash $25,000,Merchandise Inventory $15,000, and D. Beaman, Capital, $40,000. During the month of June,the company had the...

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At the beginning of June 2021, Beaman’s Distributing Company’s ledger showed Cash $25,000,

Merchandise Inventory $15,000, and D. Beaman, Capital, $40,000. During the month of June,

the company had the following selected transactions:

June 2 Purchased $27,000 of merchandise inventory from Sun Supply Co., terms 1/15, n/30,

FOB destination.

4 The correct company paid $325 cash for freight charges on the June 2 purchase.

5 Sold merchandise inventory to Grande Retailers for $36,000. The cost of the

merchandise was $22,620 and the terms were 2/10, n/30, FOB destination.

6 Issued a $2,850 credit for merchandise returned by Grande Retailers. The

merchandise originally cost $1,780 and was returned to inventory.

6 The correct company paid $420 freight on the June 5 sale.

8 Purchased $1,800 of supplies for cash.

10 Purchased $12,900 of merchandise inventory from Jem Wholesalers, terms 2/10,

n/30, FOB shipping point.

10 The correct company paid $150 freight costs on the purchase from Jem Wholesalers.

12 Received a $900 credit from Jem Wholesalers for returned merchandise.

15 Paid Sun Supply Co. the amount due.

15 Collected the balance owing from Grande Retailers.

19 Sold merchandise for $21,750 cash. The cost of this merchandise was $13,710.

20 Paid Jem Wholesalers the balance owing from the June 10 purchase.

25 Made a $1,500 cash refund to a cash customer for merchandise returned. The

returned merchandise had a cost of $940. The merchandise was damaged and could

not be resold.

30 Sold merchandise to Lion & Company for $12,840, terms n/30, FOB shipping point.

Beaman’s cost for this merchandise was $8,100.





BAT4M

Mr. Grande





Chapter 5





Evaluation Assignment





Name: _________________





KU ____ APP ____ THINK ____ COM ____

21 27 9 17





Instructions:

(a) Record the transactions assuming Beaman uses a perpetual inventory system.

(b) Set up a ledger with T-accounts for Merchandise Inventory, Sales, Sales Returns

.....&.Allowances, Sales Discounts, and Cost of Goods Sold. Enter the beginning merchandise

.....inventory balance, and post the transactions.

(c) Calculate the gross profit, for the month of June 2021. Show calculations.

(d) Assume that Beaman has a “no questions asked” policy in terms of accepting sales returns

....up to six months after the initial sale. What uncertainties does the company face in terms of

....calculating its gross profit for June?





QUESTION 2

Data for Beaman’s Distributing Company are presented in Question 1. A physical inventory

count shows the company has $11,140 of inventory on hand at June 30, 2021.

Instructions:

(a) Record the transactions assuming Beaman’s Distributing Company uses a periodic

....inventory system.

(b) Set up a ledger with T-accounts for Merchandise Inventory, Sales, Sales Returns &

.....Allowances, Sales Discounts, Purchases, Purchase Returns & Allowances, Purchase

.....Discounts, Freight In, and Freight Out. Enter beginning balances, and post the transactions.

(c) Prepare a partial multiple-step income statement, up to gross profit, for the month of June

.....2021.

(d) Would you expect Beaman’s Distributing Company’s gross profit to be higher, lower, or the

.....same amount if it uses a periodic inventory system instead of a perpetual inventory system?

.....Explain.





QUESTION 3

The following information (in thousands) is for NuStyle Clothing Inc.:

2021 2020 2019

Current assets $ 89,055 $ 82,862 $ 72,084

Current liabilities 18,743 26,858 16,451

Net sales 236,432 246,326 243,159

Cost of goods sold 107,000 116,157 132,884

Profit (loss) 11,457 10,829 (3,464)

Instructions:

(a) Calculate the gross profit margin, profit margin, and current ratio for NuStyle for 2019,

.....2020, and 2021. Round off calculations to 2 decimal places.

(b) Comment on whether the ratios have improved or deteriorated over the three years.

(c) What other information would be useful when evaluating these ratios over the three-year

.....period? Explain.
*Note


A correction is required for Question 1(d). The question should say:

(d) Assume that Beaman has a “no questions asked” policy in terms of accepting sales returns

....up to six months after the initial sale. What uncertainties does the company face in terms of

....calculating its gross profit for June?









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Answered 4 days AfterNov 10, 2022

Answer To: At the beginning of June 2021, Beaman’s Distributing Company’s ledger showed Cash...

Prince answered on Nov 15 2022
41 Votes
Question 1
    Part A.                         Part B.                                             Part C.             Part D.
    Date    Particular    Debit    Credit            Merchandise Inventory                     Sales Returns & Allowances                        Calculation of Gross Profit            The company faces the uncertainty of not knowing how many products will be returned within the six-month timeframe. This could result in the company over or under-estimating its gross profit for the month of sale.
    2-Jun-21    Merchandise Inventory     $27,000.00                1-Jun-21    $15,000.00    $22,620.00    5-Jun-21        6-Jun-21    $2,850.00                    Particular    Amount
        Account Payables        $27,000.00            2-Jun-21    $27,000.00    $900.00    12-Jun-21        25-Jun-21    $1,500.00                    Total Revenue:
        (To record purchases)                    6-Jun-21    $1,780.00    $270.00    15-Jun-21                                Sales    $70,590.00
                            10-Jun-21    $12,900.00    $13,710.00    19-Jun-21                                Less: Sales Discounts    -$663.00
    4-Jun-21    No Entry is required                    10-Jun-21    $150.00    $240.00    20-Jun-21                                Less: Sales Returns & Allowances    -$4,350.00
                                    $8,100.00    30-Jun-21                                Net Sales    $65,577.00
    5-Jun-21    Account Receivable    $36,000.00
        Sales        $36,000.00                                                        Less: Cost of Goods Sold    $42,650.00
        (To record Sales)                                                                Gross Profit    $22,927.00
                                    $10,990.00                $4,350.00
        Cost of Goods Sold    $22,620.00
        Merchandise Inventory         $22,620.00
        (To cost COGS on Sales)                    Sales                    Sales Discounts
                                    $36,000.00    5-Jun-21        15-Jun-21    $663.00
    6-Jun-21    Sales Returns & Allowances    $2,850.00                        $21,750.00    19-Jun-21
        Account Receivable        $2,850.00                    $12,840.00    30-Jun-21
        (To record Sales return)
        Merchandise Inventory     $1,780.00
        Cost of Goods Sold        $1,780.00
        (To record COGS on sales return)
    6-Jun-21    Freight Expenses    $420.00                        $70,590.00                $663.00
        Cash        $420.00
        (To record freight paid expenses)
                            Cost of Goods Sold
    8-Jun-21    Supplies    $1,800.00                5-Jun-21    $22,620.00    $1,780.00    6-Jun-21
        Cash        $1,800.00            19-Jun-21    $13,710.00
        (To record supplies purchase)                    30-Jun-21    $8,100.00
    10-Jun-21    Merchandise Inventory     $12,900.00
        Account Payables        $12,900.00
        (To record purchases)
    10-Jun-21    Merchandise Inventory     $150.00
        Cash        $150.00                $42,650.00
        (To record freight paid)
    12-Jun-21    Account Payables    $900.00
        Merchandise Inventory         $900.00
        (To record purchases...
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