Comprehensive example

Comprehensive example - XYZ has the following balances as...

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XYZ has the following balances as of 12/31/02: Cash 10,000 Accounts receivable, net of $2,500 allowance for doubtful accounts 45,000 Inventory 70,000 Marketable securities, at fair value, cost of $11,500 11,500 Fixed assets 500,000 Accumulated depreciation (200,000) Accounts payable 30,000 Debt 200,000 Retained earnings 106,500 Common stock 100,000 The following applies to the month ended January 31, 2003 (XYZ uses perpetual inventory accounting): 1. Combined inventory purchases for the month of $450,000, on credit, terms 2/10 net 30, XYZ uses the gross method 2. Sell goods to customers for $750,000 (no discounts offered). Perpetual inventory system indicates that the cost of the goods sold was $500,000. 3. Combined collections from customers of $560,000 of accounts receivable during January. 4. Management concludes that an adjustment to lower the cost of inventory to market is required; the adjustment required is $20,000.
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This note was uploaded on 08/06/2008 for the course ECON 136A taught by Professor Anderson during the Winter '08 term at UCSB.

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Comprehensive example - XYZ has the following balances as...

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