Review Problem 2 Revised

Review Problem 2 Revised - • Received $24,000 for partial...

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Review Problem For Exam 2 Sassicaia Inc. had the following transactions in 2011 : January 1 April 3 Beg Inv Purchased 400 units @ $ 7.00 each 800 units @ $ 9.00 each June 13 Purchased 500 units @ $11.00 each August 7 Purchased 250 units @ $13.00 each November 10 Sold 1,250 units @ $31.20 each Sassicaia uses FIFO to account for its inventory. All sales and purchases are made on account. Total shipping cost for sales was $400. Shipping terms were FOB Shipping Point. On January 1, 2011 Sassicaia had a balance in Accounts Receivable of $20,000 and a balance in Allowance for Doubtful accounts of $600. Sassicaia purchased a delivery truck on January 1, 2009 for $30,000. The truck has a useful life of 4 years and a salvage value of $5,000. Sassicaia uses the double-declining balance method of depreciation. Wrote off a customer’s account for $250.
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Unformatted text preview: • Received $24,000 for partial payment of accounts receivable. • Reinstated a customer’s account of $200. • Sassicaia estimates that 4% of its ending accounts receivable balance will be uncollectible. Sassicaia uses the allowance method to account for bad debts. REQUIRED 1. What is net income in 2011? 2. What is ending inventory on the December 31, 2011 Balance Sheet? 3. What is the book value of the delivery truck on the December 31, 2011 Balance Sheet? 4. What is the cash (net) realizable value of Accounts Receivable on the December 31, 2011 Balance Sheet? 5. What is gross margin if Sassicaia uses LIFO instead of FIFO? 6. If Sassicaia sold the delivery truck on January 1, 2012 for $6,500, what would be the gain or loss, and what would be the cash flow....
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