October 12, 2011
Supplemental Instruction
IowaStateUniversity / Leader: / Allie P.
Course: / ACCT 284 (BD)
Instructor: / Whittle
1)Cy’s is a major retailer which provides merchandise and services to customers through department stores. In 2010, Cy’s reported the following information on its financial statements:
Cost of Goods Sold$11,571 million
Ending Inventory (current year) 3,259 million
Ending Inventory (prior year) 3,641 million
The cost of inventory purchases during the year was $11,289 million. Estimate the cost of shrinkage for the year.
2)Review: What is the equation for net sales?
3)Apply: Campanile Creations sells merchandise to its customers for $1,000, at a cost to the company of $500 per unit. When customers purchase merchandise on account, the invoice terms are 2/10, n/30. The company entered into the following transactions during the year ended December 31, 2010:
a.Sold merchandise for cash, $13,000.
b.Sold merchandise to Maple Co.; invoice price, $5,000.
c.Sold merchandise to Willow, Inc.; invoice price, $3,000.
d.Two days after the sale, accepted a return of two items from Maple Co., which received a credit on its account.
e.Sold merchandise to Larch, Ltd.; invoice price, $6,000.
f.Received full payment from Maple Co. on account nine days after the invoice date.
g.Received full payment from Larch, Ltd. twelve days after the invoice date.
h.Ten days after receiving payment from Maple Co., accepted a return of two additional units (because the units ultimately were determined to be defective) and issued a cash refund.
Complete the following table by indicating the effect of each of the transactions listed above. Then, calculate the amount of Net Sales that would have been reported on the income statement for the year ended December 31, 2010.
Transaction / Sales Revenue / Sales Discounts / Sales Returns and Allowancesa
b
c
d
e
f
g
h
Totals
Net Sales =