Discrepancies on Chapter 5 5.4 The following selected transactions were completed during August between Summit Company and Beartooth Co.: Aug. 1 Summit Company sold merchandise on account to Beartooth Co., $48,000, terms FOB destination, n/15. The cost of the goods sold was $28,800. 2 Summit Company paid freight of $1,150 for delivery of merchandise sold to Beartooth Co. on August 1. 5 Summit Company sold merchandise on account to Beartooth Co., $66,000, terms FOB shipping point, n/eom. The cost of the goods sold was $40,000. 9 Beartooth Co. paid freight of $2,300 on August 5 purchase from Summit Company. 15 Summit Company sold merchandise on account to Beartooth Co., $58,700, terms FOB shipping point, n/45. Summit paid freight of $1,675, which was added to the invoice. The cost of the goods sold was $35,000. 16 Beartooth Co. paid Summit Company for purchase of August 1. 20 Summit Company paid Beartooth Co. a cash refund of $1,000 for defective merchandise purchased on August 1. Beartooth Co. kept the merchandise. 31 Beartooth Co. paid Summit Company on account for purchase of August 5. 31 Summit Company issued Beartooth Co. a credit memo for merchandise with an invoice amount of $4,000 that was returned from the August 15 sale. The cost of the merchandise returned was $2,500. Required: Journalize the August transactions for (1) Summit Company and (2) Beartooth Co. Chart of Accounts-Summit Company CHART OF ACCOUNTS Summit Company General Ledger ASSETS 110 Cash 121 Accounts Receivable-Beartooth Co. 125 Notes Receivable 130 Inventory 131 Estimated Returns Inventory 140 Office Supplies 141 Store Supplies 142 Prepaid Insurance 180 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 216 Salaries Payable 218 Sales Tax Payable 219 Customer Refunds Payable 221 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 521 Delivery Expense 522 Advertising Expense 524 Depreciation Expense-Store Equipment 525 Depreciation Expense-Office Equipment 526 Salaries Expense 531 Rent Expense 533 Insurance Expense 534 Store Supplies Expense 535 Office Supplies Expense 536 Credit Card Expense 539 Miscellaneous Expense 710 Interest Expense Chart of Accounts-Beartooth Co. CHART OF ACCOUNTS Beartooth Co. General Ledger ASSETS 110 Cash 120 Accounts Receivable 125 Notes Receivable 130 Inventory 131 Estimated Returns Inventory 140 Office Supplies 141 Store Supplies 142 Prepaid Insurance 180 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 211 Accounts Payable-Summit Company 216 Salaries Payable 218 Sales Tax Payable 219 Customer Refunds Payable 221 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends REVENUE 410 Sales 610 ...

1. Discrepancies on Chapter 5
5.4 The following selected transactions were completed during
August between Summit Company and Beartooth Co.:
Aug.
1
Summit Company sold merchandise on account to Beartooth
Co., $48,000, terms FOB destination, n/15. The cost of the
goods sold was $28,800.
2
Summit Company paid freight of $1,150 for delivery of
merchandise sold to Beartooth Co. on August 1.
5
Summit Company sold merchandise on account to Beartooth
Co., $66,000, terms FOB shipping point, n/eom. The cost of the
goods sold was $40,000.
9
Beartooth Co. paid freight of $2,300 on August 5 purchase from
Summit Company.
15
Summit Company sold merchandise on account to Beartooth
Co., $58,700, terms FOB shipping point, n/45. Summit paid
freight of $1,675, which was added to the invoice. The cost of
the goods sold was $35,000.
16

2. Beartooth Co. paid Summit Company for purchase of August 1.
20
Summit Company paid Beartooth Co. a cash refund of $1,000
for defective merchandise purchased on August 1. Beartooth Co.
kept the merchandise.
31
Beartooth Co. paid Summit Company on account for purchase of
August 5.
31
Summit Company issued Beartooth Co. a credit memo for
merchandise with an invoice amount of $4,000 that was returned
from the August 15 sale. The cost of the merchandise returned
was $2,500.
Required:
Journalize the August transactions for (1) Summit Company and
(2) Beartooth Co.
Chart of Accounts-Summit Company
CHART OF ACCOUNTS
Summit Company
General Ledger
ASSETS
110
Cash
121
Accounts Receivable-Beartooth Co.
125
Notes Receivable
130
Inventory
131
Estimated Returns Inventory

3. 140
Office Supplies
141
Store Supplies
142
Prepaid Insurance
180
Land
192
Store Equipment
193
Accumulated Depreciation-Store Equipment
194
Office Equipment
195
Accumulated Depreciation-Office Equipment
LIABILITIES
210
Accounts Payable
216
Salaries Payable
218
Sales Tax Payable
219
Customer Refunds Payable
221
Notes Payable
EQUITY
310
Common Stock
311
Retained Earnings
312

4. Dividends
REVENUE
410
Sales
610
Interest Revenue
EXPENSES
510
Cost of Goods Sold
521
Delivery Expense
522
Advertising Expense
524
Depreciation Expense-Store Equipment
525
Depreciation Expense-Office Equipment
526
Salaries Expense
531
Rent Expense
533
Insurance Expense
534
Store Supplies Expense
535
Office Supplies Expense
536
Credit Card Expense
539
Miscellaneous Expense
710
Interest Expense

5. Chart of Accounts-Beartooth Co.
CHART OF ACCOUNTS
Beartooth Co.
General Ledger
ASSETS
110
Cash
120
Accounts Receivable
125
Notes Receivable
130
Inventory
131
Estimated Returns Inventory
140
Office Supplies
141
Store Supplies
142
Prepaid Insurance
180
Land
192
Store Equipment
193
Accumulated Depreciation-Store Equipment
194
Office Equipment
195
Accumulated Depreciation-Office Equipment
LIABILITIES

6. 211
Accounts Payable-Summit Company
216
Salaries Payable
218
Sales Tax Payable
219
Customer Refunds Payable
221
Notes Payable
EQUITY
310
Common Stock
311
Retained Earnings
312
Dividends
REVENUE
410
Sales
610
Interest Revenue
EXPENSES
510
Cost of Goods Sold
521
Delivery Expense
522
Advertising Expense
524
Depreciation Expense-Store Equipment
525

7. Depreciation Expense-Office Equipment
526
Salaries Expense
531
Rent Expense
533
Insurance Expense
534
Store Supplies Expense
535
Office Supplies Expense
536
Credit Card Expense
539
Miscellaneous Expense
710
Interest Expense
General Journal-Summit Company
(1) Journalize the August transactions for Summit Company.
General Journal Instructions
PAGE 10
JOURNAL
ACCOUNTING EQUATION
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
ASSETS
LIABILITIES
EQUITY
1

8. 2
3
4
5

9. 6
7
8
9

10. 10
11
12
13

11. 14
15
16
17

12. 18
19
20
21

13. 22
23
24
25

14. 26
General Journal-Beartooth Co.
(2) Journalize the August transactions for Beartooth Co.
General Journal Instructions
PAGE 15
JOURNAL
ACCOUNTING EQUATION
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
ASSETS
LIABILITIES
EQUITY
1

15. 2
3
4
5

16. 6
7
8
9

17. 10
11
12
13

18. 14
15
16
5.5

19. The following selected accounts and their current balances
appear in the ledger of Clairemont Co. for the fiscal year ended
May 31, 20Y2:
Cash
$240,000
Accounts receivable
966,000
Inventory
1,690,000
Estimated returns inventory
22,500
Office supplies
13,500
Prepaid insurance
8,000
Office equipment
830,000
Accumulated depreciation-office equipment
550,000
Store equipment
3,600,000
Accumulated depreciation-store equipment
1,820,000
Accounts payable
321,000
Salaries payable
41,500
Customer refunds payable
40,000
Estimated coupons payable
5,000
Note payable (final payment due in 6 years)
300,000
Common stock
500,000
Retained earnings

20. 2,949,100
Dividends
100,000
Sales
11,343,000
Cost of goods sold
7,850,000
Sales salaries expense
916,000
Advertising expense
550,000
Depreciation expense-store equipment
140,000
Miscellaneous selling expense
38,000
Office salaries expense
650,000
Rent expense
94,000
Depreciation expense-office equipment
50,000
Insurance expense
48,000
Office supplies expense
28,100
Miscellaneous administrative expense
14,500
Interest expense
21,000
Required:
1.
Prepare a multiple-step income statement.
2.
Prepare a statement of stockholders’ equity. Additional common
stock of $75,000 was issued during the year ended May 31,

21. 20Y2.
3.
Prepare a balance sheet, assuming that the current portion of the
note payable is $50,000.
4.
Briefly explain how multiple-step and single-step income
statements differ.
Labels and Amount Descriptions
Labels
Administrative expenses
Current assets
Current liabilities
For the Year Ended May 31, 20Y2
Long-term liabilities
May 31, 20Y2
Operating expenses
Other revenue and expense
Property, plant, and equipment
Selling expenses
Amount Descriptions
Balances, June 1, 20Y1
Balances, May 31, 20Y2

22. Book value-office equipment
Book value-store equipment
Dividends
Gross profit
Issued common stock
Net income
Net loss
Note payable (current portion)
Operating income
Total administrative expenses
Total assets
Total current assets
Total current liabilities
Total liabilities
Total liabilities and stockholders’ equity
Total operating expenses
Total property, plant, and equipment
Total selling expenses

23. Total stockholders’ equity
Income Statement
1. Prepare a multiple-step income statement.
Income Statement Instructions
Clairemont Co.
Income Statement
1
2
3
4
5
6

24. 7
8
9
10
11
12
13

25. 14
15
16
17
18
19
20

26. 21
22
23
Statement of Stockholders’ Equity
2. Prepare a statement of stockholders’ equity. Additional
common stock of $75,000 was issued during the year ended May
31, 20Y2.
Statement of Stockholders’ Equity Instructions
Clairemont Co.
Statement of Stockholders’ Equity
1
Common Stock
Retained Earnings
Total
2

27. 3
4
5
6
Balance Sheet
3. Prepare a balance sheet, assuming that the current portion of
the note payable is $50,000.
Balance Sheet Instructions
Clairemont Co.
Balance Sheet
1
Assets
2

28. 3
4
5
6
7
8
9

29. 10
11
12
13
14
15
16

30. 17
18
19
Liabilities
20
21
22
23

31. 24
25
26
27
28
29
30
Stockholders’ Equity

32. 31
32
33
34
Final Question
Briefly explain how multiple-step and single-step income
statements differ.
Which type of income statement shows intermediate balances?
Multiple-step
Single-step