F08_136a_MT2

F08_136a_MT2 - 26. DR./ <CR> Cash...

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Unformatted text preview: 26. DR./ <CR> Cash 10,000 Available for sale securities 10,000 Accounts receivable 25,000 Allowance for doubtful accounts (2,500) Inventory 50,000 Tax effect- Accounts payable &accrued expenses (40,000) Common stock (1,000) Accumulated other comprehensive income (2,000) Retained earnings (17,000) Sales (200,000) COGS 140,000 Selling general & administrative expense 25,000 (2,500) 1. 2. 3. 4. 5. 6. 7. 8. 9. Pay $40,000 in cash for accounts payables after expiration of the discount period. Management writes-off $4,500 of accounts receivable. The discount period for both the payables and receivables in (1) and (2) above expires. Management reviews the accounts receivable and determines that an additional $5,000 should be added to the allowance for doubtful accounts. Inventory count is performed resulting in $45,000 of inventory on hand. XYZ collects $2,500 for an account balance which was previously written-off. XYZ has the following summary trial balance as of, and for the year ended 12/31/07 before any of the activity noted below is recorded, and before closing out net income to retained earnings: XYZ uses a PERIODIC inventory method and uses "tax effect" account for all items requiring net of tax treatment & 35% tax rate. Also, on the day that discount periods expire, XYZ records entries to reflect discount expirations. Purchase $40,000 of inventory on credit, terms 2/10n30, using the GROSS method. INSTRUCTIONS: Record the Journal entry for each of the following items in your blue book. XYZ uses 3% of gross sales for bad debt allowance estimation at the time of sale, and if it is later determined that adjustment to reported allowances is required, adjusts for those changes in estimates when first noted by management. Sell goods for $50,000 on credit, terms 2/10n30, using the NET method. Collect $44,100 in cash for accounts receivable within the discount period. 27. Cost Retail Beginning Inventory 350,000 525,000 Purchases 2,000,000 3,600,000 Markups, net 10,000 Markdowns, net (5,000) Net sales (3,150,000) Ending inventory at retail 980,000 Based on the following facts, please compute the ending inventory using only the LIFO Retail method. ROUND PERCENTAGES TO TWO DECIMALS IN YOUR COMPUTATIONS (I.E 50.23567%= 50.24%) 28. Umpteen Inc. utilizes dollar value LIFO and has only one "pool". The following information pertains to their computation of the inventory balance as of December 31, 2007: Inventort at Price Dec. 31 Year-end prices Index 2004 400,000 100 2005 1,250,000 110 2006 1,500,000 115 2007 1,200,000 120 Compute the ending inventory using "dollar value LIFO" as of December 31, 2004, 2005, 2006 and 2007. 26. 1. Purchases 40,000 Accounts payable 40,000 2. Accounts receivable 49,000 Sales 49,000 Bad debt expense 1,500 (50,000 *3%) Allowance for doubful accounts 1,500 3. Cash 44,100 Accounts receivable 44,100 4. Accounts payable 40,000 Cash 40,000 5. Accounts receivable 100 Sales discounts lost/ or sales 100 6. Bad debt expense 5,000 Allowance for doubtful accounts...
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This note was uploaded on 05/18/2011 for the course ECON 136A taught by Professor Anderson during the Spring '08 term at UCSB.

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F08_136a_MT2 - 26. DR./ <CR> Cash...

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