Problem 1 16 points bad debt expenseallowance for

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Problem 1 (16 points) – Bad Debt Expense/Allowance for Doubtful Accounts
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The 12/31/14 trial balance of Risen Company before adjustments reports the following balances: DR CR Accounts receivable $62,000 Allowance for doubtful accounts 460 Sales (all on credit) $493,000 Sales discounts 25,000 Instructions (a) Prepare the 12/31/14 adjusting journal entries for estimated bad debts assuming doubtful accounts are estimated to be (1) 8% of gross accounts receivable and (2) 1% of net sales . (10 points or 5 per entry) (b) Assume all the information above is the same, except the Allowance for Doubtful Accounts has a CR balance of $370 instead of a DR balance of $460. How will this affect the journal entries in part (a)? If either entry changes, record the new entry in the grid below (6 points or 3 per entry). PLEASE BE SURE TO SHOW ALL WORK IN THE SPACE PROVIDED BELOW TO BE ELIGIBLE FOR PARTIAL CREDIT. Ref. Account Title Debit Credit a1. a2. b1. b2. Problem 2 (18 points) – Inventory Cost Flow Assumptions
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During November, the following changes in inventory part #KN27 took place: Nov 1 Beg Balance 580 units @ $74.00 12 Purchased 290 units @ $75.50 19 Purchased 600 units @ $76.80 13 Sold 470 units @ $165.00 27 Sold 500 units @ $170.00 In the space provided below, please answer the following questions. BE SURE TO SHOW ALL WORK TO BE ELIGIBLE FOR PARTIAL CREDIT. MIGHT NOT BE A BAD IDEA TO USE THE INVENTORY FORMULA HERE. 1. Compute the cost of goods sold (CGS) and ending inventory (EI) under FIFO- PERPERTUAL (6 points) 2. Compute the cost of goods sold (CGS) and ending inventory (EI) under LIFO-PERIODIC (6 points) 3. Compute the cost of goods sold (CGS) and ending inventory (EI) under MOVING AVERAGE (6 points) Problem 3 (10 points) – Lower-of-cost-or-market (LOCOM)
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The December 31, 2010 inventory of Farber Company consisted of two products, for which certain information is provided below. Replacement Estimated Expected Normal Profit Product Original Cost Cost Disposal Cost Selling Price on Sales CP30 $2.50 $2.35 $1.00 $4.20 25% R2D2 $14.80 $13.75 $3.00 $20.00 10% Using the lower-of-cost-or-market approach (LOCOM) applied on an individual-item basis , compute the inventory valuation that should be reported for each product on December 31, 2010 (5 points each). Be sure to show all your work below to be eligible for partial credit.
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  • Fall '12
  • Staff
  • Balance Sheet, Generally Accepted Accounting Principles, Doubtful Accounts, unrealized holding gain

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