Due Wednesday, October 5, 2011
LIFO inventory costing is not allowed in the United Kingdom (UK).
companies based there use FIFO.
You are examining the financial statements from
Leicester Manufacturing, a UK firm.
Inventory replenishment costs have varied
somewhat over the past two years.
Which will be more accurate, the Inventory account
on the balance sheet, or the Cost of Goods Sold figure on the income statement?
Inventory on the balance sheet will contain the costs associated with the most
recently purchased items, and as a result will be more accurate, that is, those values will
more closely reflect the cost that would be paid today for those items.
Avioni Fashions uses the aging method for estimating uncollectible accounts.
February 1, 2005, Accounts Receivable had a balance of $383,341 (debit), and
Allowance for Uncollectible Accounts had a balance of $43,000 (credit).
year, the company had sales on account of $3,724,000, accounts written off of $44,300,
and collections from customers of $3,214,000.
As past of the year end adjusting
procedures on January 31, 2006, the company performs an aging of its accounts and
1 – 30
31 – 60
61 – 90
find the end-of-year balances in Accounts Receivable and Allowance for Uncollectible
Accounts prior to adjustments.
Clearly Accounts Receivable has a debit balance of $849,041, read from above.
Allowance for Uncollectible Accounts has a debit balance of $1,300.
Compute the necessary end of year adjustments needed to Accounts Receivable.
Accounts Receivable is not adjusted at year end.
Provide the journal entry needed to record Bad Debt Expense for the fiscal year ended
January 31, 2006.