CHAPTER 5
EXERCISE 5-6 (a) Dec. 3 Accounts Receivable 18,000 Sales 18,000 3 Cost of Goods Sold 10,000 Merchandise Inventory 10,000 7 No entry necessary. 8 Sales Returns and Allowances 1,200 Accounts Receivable 1,200 Merchandise Inventory 650 Cost of Goods Sold 650 11 Cash ($16,800 – $336) 16,464 Sales Discounts [($18,000 – $1,200) × 2%] 336 Accounts Receivable ($18,000 – $1,200) 16,800 (b) Dec. 3 Merchandise Inventory 18,000 Accounts Payable 18,000 7 Merchandise Inventory 450 Cash 450 8 Accounts Payable 1,200 Merchandise Inventory 1,200 11 Accounts Payable ($18,000 – $1,200) 16,800 Merchandise Inventory [($18,000 – $1,200) × 2%] 336 Cash ($16,800 – $336) 16,464 (c) Sales $18,000 Less: Sales returns and allowances $1,200 Sales discounts 336 1,536 Net sales 16,464 Cost of goods sold ($10,000 – $650) 9,350 Gross profit $7,114

EXERCISE 5-8

(a)
BLUE DOOR CORPORATION
Income Statement (Single-Step)
Year Ended December 31, 2015 Revenues Sales $2,400,000 Less: Sales returns and allowances $41,000 Sales discounts 8,500 49,500 Net sales 2,350,500 Interest revenue 30,000 Rent revenue 24,000 $2,404,500 Expenses Cost of goods sold $1,085,000 Salaries expense 675,000 Depreciation expense 125,000 Interest expense 70,000 Advertising expense 55,000 Freight out 25,000 Insurance expense