Appendix 5B: Worksheet for a Merchandising Business Chapter 5

Learning Objectives Prepare worksheets for a merchandiser

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

Worksheet for a Merchandising Business

Beach Day Coolers’ trial balance as of December 31, 2012 is provided. P5B-2A : Preparing a merchandiser’s worksheet, preparing financial statements, and preparing closing entries Beach Day Coolers’ trial balance as of December 31, 2012 is provided. Complete the accounting worksheet for the year ended December 31, 2012. Key adjusting entries by letter. Prepare the multi-step income statement, statement of owner’s equity, and balance sheet for the year. Prepare closing entries for the year.

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

Requirement 2 Beach Day Coolers, Inc. Income Statement Year Ended December 31, 2012 Revenue: Sales revenue $191,000 Cost of goods sold _ 69,500 Gross profit $ 121,500 Operating expenses: Salary expense $47,900 Rent expense 16,400 Utilities expense 6,800 Depreciation expense _4,900 _76,000 Operating income 45,500 Other revenue (expenses): Interest expense 3,400 __(3,400) Net income $ 42,100

Statement of Retained Earnings Requirement 2 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

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

Requirement 3 Dec 31 Sales revenue 191,000 Income summary 148,900 Cost of goods sold 69,500 Salary expense 47,900 Rent expense 16,400 Utilities expense 6,800 Interest expense 3,400 Depreciation expense 4,900 ($191,000 ­− $148,900) 42,100 Retained earnings 36,600 Dividends

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.

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