Ch6 Solutions

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CHAPTER 6
MERCHANDISING ACTIVITIES
OVERVIEW OF BRIEF EXERCISES, EXERCISES, PROBLEMS, AND CRITICAL THINKING CASES
Brief
Exercises
B. Ex. 6.1
B. Ex. 6.2
B. Ex. 6.3
B. Ex. 6.4
B. Ex. 6.5
B. Ex. 6.6

B. Ex. 6.7
B. Ex. 6.8
B. Ex. 6.9
B. Ex. 6.10
B. Ex. 6.11

Exercises
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
6.11
6.12
6.13

Topic
Computation of gross profit
Accounts receivable subsidiary
ledger
Perpetual inventory system computation of income
Periodic inventory system inventory balance during year
Periodic inventory system determine cost of goods sold
Periodic inventory system working backwards through the
COGS section
Periodic inventory system - closing
process
Benefit of taking a purchase
discount
Sales returns and allowances
Special journals
Ethics, fraud, and corporate
governance
Topic
You as a student
Effects of basic merchandising
transactions
Understanding inventory cost flows
Perpetual inventory systems
Evaluating performance
Taking a physical inventory
Periodic inventory systems
Relationships within periodic
inventory systems
Selecting an inventory system
Cash discounts
Evaluating performance
Comparison of inventory
systems
Periodic inventory system

Learning
Objectives
2, 8
7

Analysis
Analysis

2, 3, 8

Analysis

2, 4, 8

Analysis

2, 4, 8

Analysis

2, 4, 8

Analysis

2, 4

Analysis

6

Analysis

6
7
8

Analysis
Analysis
Communication, judgment

Learning
Objectives
1, 6
1

Skills
Analysis, communication,
Analysis

Skills

2, 5, 8

Analysis, communication

3, 8
6, 8
3
4
4

Analysis, communication
Analysis, communication,
Analysis, communication
Analysis, communication
Analysis

5, 8
6
8
3–5

Communication, judgment
Analysis
Analysis, communication,
Analysis, communication

4, 5

Analysis, communication,

© The McGraw-Hill Companies, Inc., 2012
Overview

Exercises
6.14
6.15
Problems
Sets A, B
6.1 A,B
6.2 A,B
6.3 A,B
6.4 A,B
6.5 A,B
6.6 A,B
6.7 A,B
6.8 A,B

Topic
Difference between income and
cash flows
Using an annual report

Topic
Evaluating profitability
Income statement preparation
and interpretation
Trend analysis
Net cost and gross price methods
Merchandising transactions
Correcting Errors - Recording of
Merchandising Transactions
Accrual Accounting, Cash Flow,
and Fair Value
A comprehensive problem

Critical Thinking Cases
6.1
Selecting an inventory system
6.2
A cost-benefit analysis
6.3
Evaluating inventory systems
6.4
Manipulating income (Ethics, fraud
& corporate governance)
6.5
Real World: GAP Exploring an
annual report (Internet)

Learning
Objectives
8
8
Learning
Objectives
1, 3, 8
1-3, 6, 8

Skills
Analysis, communication
Analysis, communication,

Skills
Analysis, communication
Analysis, communication

8
3, 6
3, 6
2, 3, 6

Analysis, communication
Analysis, communication
Analysis, communication,
Analysis, communication

1, 3, 6

Analysis, communication,

1–8

Analysis, communication,
judgment

5
4, 8
3–5, 7
8
8

Communication, judgment
Analysis, communication,
Communication, judgment
Communication, judgment
Communication, research,
technology

© The McGraw-Hill Companies, Inc., 2012
Overview (p. 2)

DESCRIPTIONS OF PROBLEMS AND
CRITICAL THINKING CASES
Below are brief descriptions of each problem and case. These descriptions are accompanied by the estimated time (in minutes) required for completion and by a difficulty rating. The time estimates assume use of the partially filled-in working papers.

Problems (Sets A and B)
6.1 A,B

Claypool Hardware/Big Oak Lumber
Introduction to both perpetual inventory systems and financial statement analysis. After making journal entries for merchandising transactions, students are asked to compare the company’s gross profit rate with the industry average and draw conclusions.

35 Medium

6.2 A,B

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