HW3 acct hw33333333 PDF

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HW3 acct hw33333333
HW3 acct hw33333333
HW3 acct hw33333333
HW3 acct hw33333333
HW3 acct hw33333333
HW3 acct hw33333333
HW3 acct hw33333333
HW3 acct hw33333333...

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Question 1 The following data were selected from the records of Sykes Company for the year ended December 31, Current Year. Balances January 1,Current year Accounts receivable (various customers) Allowance for doubtful accounts

$

120,000 8,000

In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 2/10, n/30 (assume a unit sales price of $500 in all transactions and use the gross method to record sales revenue). Transactions during Current year a. b. c. d. e. f. g. h. i. j. k. l. m.

Sold merchandise for cash, $235,000. Sold merchandise to R. Smith; invoice price, $11,500. Sold merchandise to K. Miller; invoice price, $26,500. Two days after purchase date, R. Smith returned one of the units purchased in ( b) and received account credit. Sold merchandise to B. Sears; invoice price, $24,000. R. Smith paid his account in full within the discount period. Collected $98,000 cash from customer sales on credit in prior year, all within the discount periods. Miller paid the invoice in (c) within the discount period. Sold merchandise to R. Roy; invoice price, $19,000. Three days after paying the account in full, K. Miller returned seven defective units and received a cash refund. After the discount period, collected $6,000 cash on an account receivable on sales in a prior year. Wrote off a prior year account of $3,000 after deciding that the amount would never be collected. The estimated bad debt rate used by the company was 1.5 percent of credit sales net of returns.

Required: 1. Using the following categories, indicate the effect of each listed transaction, including the write-off of the uncollectible account and the adjusting entry for estimated bad debts (ignore cost of goods sold). The first transaction is used as an example. (Amounts to be deducted should be indicated by a minus sign.) transactions Sales revenue Sales Sales return and Bad debt expense discount(taken) allowances (A) $235000

(B)

$11500

(C)

$26500

(D) (E)

$500 $24000

(F)

220

(G)

2000

(H)

530

(I)

19000

(J)

-70

3500

(K) (L)

3000

(M)

1110

total

316000

2680

4000

4110

2. Prepare the journal entries for these transactions, including the write-off of the uncollectible account and the adjusting entry for estimated bad debts. Do not record cost of goods sold. Show computations for each entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2019dec31

details

Dr($)

(A)

Cash

235000

Sales (B)

Account receivable

235000 11500

Sales (C)

Account receivable

11500 26500

Sales (D)

Sale returns and allowances

26500 500

Account receivable (E)

Account receivable

500 24000

Sales (F)

24000

Cash

10780

Sales discount

220

Account receivable (G)

11000

Cash

98000

sales discount

2000

Account receivable

(H)

100000

Cash

25970

sales discount

530

Account receivable (I)

Account receivable

26500 19000

Sales (J)

Sales allowance and returns Cash

CR($)

19000 3500 3430

Sales discount (K)

Cash

70 6000

Account receivable

(I)

allowance for doubtful debts

6000

3000

account receivable

(M)

Bad debts

3000

1110

Allowance for doubtful debts

1110

3. Show how the accounts related to the preceding sale and collection activities should be reported on the 2014 income statement. (Treat sales discounts as a contra-revenue.)

Sykes Company Income statement for the year ended 2014 december31 $ Revenues Sales revenues

316000

Less sales return and allowances

(4000)

Sales discount Net sales

(2680) 309320

less other expenses bad debt expense

(4110)

net income

305210

Question 2

Casilda Company uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $50,000, (2) up to 180 days past due, $14,000, and (3) more than 180 days past due, $4,000. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncllectibility is (1) 3 percent, (2) 12 percent, and (3) 30 percent, respectively. At December 31, the end of the current year, the Allowance for Doubtful Accounts balance is $200 (credit) before the end-of-period adjusting entry is made. Required: 1. Prepare the appropriate bad debt expense adjusting journal entry for the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 2. Show how the various accounts related to accounts receivable should be shown on the December 31 current year, balance sheet. (Amounts to be deducted should be indicated by a minus sign.) 1) Dr bad debts Cr allowance for doubtful debts

4180 4180

2)

Casilda Company Balance sheet as at current year december31(extract) $

Current assets Account receivable

68000

Less allowance for doubtful debts

-4380

Net account receivable

63620

Question 3

On its recent financial statements, Hassell Fine Foods reported the following information about net sales revenue and accounts receivable (amounts in thousands):

According to its Form 10-K, Hassell recorded bad debt expense of $88 and there were no bad debt recoveries during the current year. (Hint: Refer to the summary of the effects of accounting for bad debts on the Accounts Receivable (Gross) and the Allowance for Doubtful Accounts T-accounts. Use the T-accounts to solve for the missing values.)

Required: 1. What amount of bad debts was written off during the current year? (Enter your answers in thousands not in dollars.)

Allowance for doubtful debts Current year Dec31 account receivable Dec31 bal.c/d

$ Current year

$

52000 Jan1 bal.b/d

117000

153000 Dec31 bad debts 205000

88000 205000

2. Based on your answer to requirement (1), solve for cash collected from customers for the current year, assuming that all of Hassell’s sales during the period were on open account. (Enter your answers in thousands not in dollars.)

Account receivable Current $ Jan1 11455000 Dec31sales 60420000

year Current year Dec31 allowance for doubtful debts bal.b/d Dec31 cash Dec31 bal.c/d

$ 52000 58081000 13742000

Question 4 At the end of January of the current year, the records of Donner Company showed the following for a particular item that sold at $16 per unit:

a) Assuming the use of a periodic inventory system, compute Cost of Goods Sold under each method of inventory: average cost, FIFO and LIFO Opening inventory Purchase,jan1 2 Purchase,jan2 6 Goods available for sale Closing inventory Cost of goods sold

Average cost FIFO 2365 2365

LIFO 2365

3600

3600

3600

1280

1280

1280

7245

7245

7245

3680

4160

3205

3565

3085

4040

b) FIFO or LIFO, which method would result in the higher pretax income? FIFO

c) FIFO or LIFO, which would result in the higher EPS? FIFO

Question 5 Jones Company is preparing the annual financial statements dated December 31 of the current year. Ending inventory information about the five major items stocked for regular sale follows:

Required: Compute the valuation that should be used for the current year ending inventory using the LCM rule applied on an item-by-item basis.

item A B C D E TOTAL

quantity 50 80 10 70 350

Total cost 750 2400 480 1750 3500 8880

Total market 600 3200 520 2100 1750 8170

Lcm valuation 600 2400 480 1750 1750 8170...