1. DeVries uses an allowance method for recording bad debts. DeVries determined that $1,000 of accounts receivable from Morris Corporation are uncollectible. The entry DeVries should make to write off the Morris account would include:
A. a credit to Cash for $1,000.
B. a credit to Allowance for Uncollectible Accounts for $1,000.
C. a credit to Accounts Receivable for $1,000.
D. a credit to Uncollectible Accounts Expense for $1,000.
E. None of these.
2. Inventory accounts are classified in which section of the balance sheet?
A. Current assets.
B. Investments.
C. Property, plant, and equipment.
D. Intangible assets.
E. None of these.
3. Inventory Item A has a cost of $2,000. The replacement cost is $1,800. The item can be sold for $2,500 to a customer, and the normal profit margin is $1,000. Using the lower-of-cost-or-market rule, at what amount should this item be reported in inventory on the balance sheet?
A. $1,800
B. $2,000
C. $2,500
D. $1,000
Problem #1
Annual sales were $1,600,000, and the January 1 Allowance for Uncollectibles had a credit balance of $25,000. $18,600 of accounts were written off during the year. The provision for uncollectible accounts is based on % of sales. Using the percentage of sales technique and a 2% rate, complete the following:
Required
1. Prepare the entry to record the accounts written off during the year.
2. Prepare the entry to record the provision for uncollectibles.
Problem #2
Hall uses aging to estimate uncollectible accounts. The following table reveals the likelihood of collection:
|
Age
|
Probability of Collection
|
Amount Outstanding
|
|
0 to 30 Days
|
98%
|
$100,000
|
|
31 to 60 Days
|
90%
|
$50,000
|
|
61 to 120 Days
|
50%
|
$25,000
|
|
Over 120 Days
|
10%
|
$10,000
|
Accounts of $100,000 are less than 30 days old (98% collectible), $50,000 are 30 to 60 days old (90% collectible), $25,000 are 61-120 days old (50% collectible), and the remaining $10,000 is 10% collectible.
Required
1. Prepare the journal entry to update the allowance for uncollectibles, assuming the balance prior to aging was a $10,000 debit.
2. Prepare the journal entry to update the allowance for uncollectibles, assuming the balance prior to aging was a $1,000 credit.
Problem #3
Alta had beginning inventory of 100 units at $10 each. The purchase price increased steadily during the period. Purchases during the period were 200 at $11 each, 300 at $13 each, and 150 at $15 each. Sales were 500 units at $20. Using periodic FIFO:
Required:
1. Using periodic FIFO:
a. Determine the cost of the ending inventory
b. Determine the cost of the goods sold
c. Determine the Gross profit
2. Using periodic LIFO:
a. Determine the cost of the ending inventory
b. Determine the cost of the goods sold
c. Determine the Gross profit
3. Using periodic weighted average:
a. Determine the cost of the ending inventory
b. Determine the cost of the goods sold
c. Determine the Gross profit
Problem #4
A company's records show the following:
|
Ending balance per bank statement
|
|
$ 22,484
|
|
Add: Deposits in transit
|
|
1,776
|
|
Deduct: Outstanding checks
|
|
|
|
#12221
|
|
( 4,717)
|
|
Correct cash balance
|
|
$ 19,543
|
|
Ending balance per company records
|
|
$ 14,344
|
|
Add:
|
|
|
|
Note receivable collection
|
$ 5,450.00
|
|
|
Interest earnings
|
106.00
|
5,556
|
|
Deduct:
|
|
|
|
NSF Checks (customer collections on account)
|
322.00
|
|
|
Service charges
|
35.00
|
(357.00)
|
|
Correct cash balance
|
|
$19,543
|
Required
Prepare the entry to record the adjustments necessitated by the bank reconciliation.