On December 31, 2011, Pesnya Company accepted a promissory note from Wena Enterprise for services rendered. The Note has a face value of $475,000 is due December 31, 2018, and pays interest annually at stated rate of 3%. The market rate of interest for a note of similar risk is 9%.
Compute the present value of the note and the amount of the discount.
32. (15 points)
The following information applies to the cash account of the Luka Corporation as of August 31.
Balance per company books $7,165.84
Bank service charge for August 25.00
Note collected for the company by the bank 1,200.00
August outstanding checks 1,822.17
NSF* check returned with August bank statement 328.45
Balance per August bank statement 8,438.56
Interest on the note collected by the bank 54.00
Receipts recorded on August 31 and sent to the bank
that night 1,450.00
*Not sufficient fund check
1. Prepare a bank reconciliation for Luka Corporation at August 31 that shows the correct cash balance on that date.
2. Prepare any necessary journal entries
33. (6 points)
A trial balance for Foss Company shows the following balances at December 31:
Accounts Receivable 120,000
Allowance for Doubtful Accounts 200
Sales discounts 10,000
Prepare the adjusting entry necessary at December 31 to provide for estimated uncollectibles under each of the following independent assumptions.
1. Foss Company uses the percentage of sales method of accounting for uncollectible accounts. Company experience indicates that 1% on net sales will prove uncollectible.
2. Foss bases its estimate of uncollectible accounts on aging of accounts receivable. The aging at December 31 indicates uncollectible accounts of $4,000.
34. (15 points)
Dorra Company’s records show the following information related to one of its products:
May 1 Balance on hand 300 [email protected] $5
May 12 Purchased 600 units @ $6
May 30 Purchased 100 units @ $7
Dorra Company uses a periodic inventory system. Assuming that 600 units were sold during May.
Compute the May inventory and the cost of goods sold during May under each of the following methods:
35. (20 points)
Toska Corporation had the following transactions in connection with their inventory account during the month of June.
June 1 (goods on hand) 650 units @ $8.4
June 3 770 units @ 8.2
June 7 1,[email protected] 8.00
June 11 650 units @ 8.5
June 16 500 units @ 8.7
June 23 750 units @ 8.6
Total 4,570 units
June 4 280 units @12.60
June 10 350 units @ 12.60
June 12 900 units @13.00
June 17 650 units @ 13.00
June 20 860 units @ 13.50
June 25 700 units @ 13.50
Total 3,740 units
1. Assuming Toska Company uses a perpetual inventory system, compute the inventory at June 30, using
2. Calculate the cost of goods sold and gross profit Toska Company should record for the month of June assuming FIFO and periodic inventory procedures.
Just a reminder: please provide detailed calculations.
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