Question

The Marchetti Soup Company entered into the following transactions during the month of June (1) purchased inventory on account for $165,000 (assume Marchetti uses a perpetual inventory system); (2) paid $40,000 in salaries to employees for work performed during the month: (3) sold merchandise that cost $120,000 to credit customers for $200,000 (4) collected $180,000 in cash from credit customers; and (5) paid suppliers of inventory $145,000. Prepare journal entries for each of the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) ook View transaction list ences Journal entry worksheet 1 2 3 4 5 6 Purchased Inventory on account for $165,000 (assume Marchetti uses a perpetual Inventory system). Note: Enter debits before credits Debit General Journal Transaction Credit Mat

Answer 1

Answer -

Q.1 Answer -

Transaction	General Journal	Debit	Credit
(1)	Inventory	$165,000
	Accounts payable		$165,000
(2)	Salaries expense	$40,000
	Cash		$40,000
(3a)	Accounts receivable	$200,000
	Sales revenue		$200,000
(3b)	Cost of goods sold	$120,000
	Inventory		$120,000
(4)	Cash	$180,000
	Accounts receivable		$180,000
(5)	Accounts payable	$145,000
	Cash		$145,000

Explanation:

An increase in assets and expenses are debited and a decrease in assets and expenses are credited. An increase in liabilities and equity are credited and a decrease in liabilities and equity are debited. And the increase in revenue is credited and a decrease in revenue is debited.

Here,

Cash, accounts receivable, and inventory are the asset accounts. Accounts payable is a liability account. Sales revenue is a revenue account. And cost of goods sold and salaries expense are the expense accounts.

Q.2 Answer -

Transaction	General Journal	Debit	Credit
1.	Deferred service revenue	$4,000
	Service revenue		$4,000
2.	Advertisement expense	$1,000
	Prepaid advertisement		$1,000
3.	Salaries expense	$16,000
	Salaries payable		$16,000
4.	Interest expense	$1,600
	Interest payable		$1,600

Calculation:

Transaction (2):

$2000 for 40 radio ads, but 20 radio ads aired per month

So,

Payment for month of December / Advertisement expense:

= ($2000 / 40 ads) * 20 ads

= $1000

Transaction (4):

Interest expense (for 4 month, from August 31, 2021 to December 31, 2021):

= Principal amount * Interest rate * (4 months / 12 months)

= $60000 * 8% * (4 months / 12 months)

= $1600

Q.3 Answer -

Bowler Corporation
Income Statement
For the Year Ended December 31, 2021
Sales revenue		$325,000
Less: Cost of goods sold		$168,000
Gross profit		$157,000
Operating expenses:
Salaries expense	$45,000
Rent expense	$20,000
Depreciation expense	$30,000
Miscellaneous expense	$12,000
Total operating expenses		$107,000
Net income		$50,000

Calculation:

Gross profit = Sales revenue - Cost of goods sold

= $325000 - $168000

= $157000

Total operating expenses = Salaries expense + Rent expense + Depreciation expense + Miscellaneous expense

= $45000 + $20000 + $30000 + $12000

= $107000

Net income = Gross profit - Total operating expenses

= $157000 - $107000

= $50000