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problem 1 - Merchandising Company Income Statement

The Olympic Company provides the following alphabetic list of accounts and their respective balances. All accounts have normal balances, and income statement account balances are for the year ending December 31, 2011. A physical count of merchandise inventory on hand year end revealed a balance of $299,000. Use this information to prepare a comprehensive income statement.                                
                                
Accounts payable                              $66,399             
Accounts receivable                            82,890            
Accumulated depreciation                  1,66,554            
Beginning inventory, Jan. 1                1,85,000            
Capital stock                                  1,44,000            
Cash                                               25,442            
Depreciation expense                          25,000            
Dividends                                         12,000            
Equipment                                     3,24,556            
Freight-in                                      1,56,000            
Insurance expense                            9,500            
Land and Buildings                          56,30,000            
Marketing expense                           86,230            
Office Supplies Expense                       3,620            
Purchase discounts                            26,850            
Purchase returns & allowances               16,000            
Purchases                                         9,80,000            
Rent expense                                    19,600            
Retained earnings, Jan. 1                   24,327            
Salaries expense                            1,58,500            
Salaries payable                              9,955            
Sales                                          15,80,000            
Sales discounts                                65,200            
Sales returns and allowances                24,000            
Utilities expense                               12,000            
                                
                                
                                
                                
problem 2 - Bank Reconciliation Honolulu Cookie Company provides the following information in order for you to prepare the company's bank reconciliation:                            
                                
                                
Balance per company records at end of month                    $53,300        
Bank service charge for the month                                          200        
NSF check returned with bank statement                              1,400        
Outstanding checks at month end                                      18,800        
Balance per bank at end of month                                      62,500        
Deposit in transit at month end                                           8,000

problem 3 - Income Statement (Single-Step) The following are information for the Lotu Wo Company:                                

Net Sales                              5,60,000            
Interest Revenue                           600            
Cost of Goods Sold                 3,66,000            
Administrative Expenses             12,000            
Selling Expenses                       18,000            
Interest Expense                        2,000            
Income Tax Expense                  50,000            
                                
Based on the above, prepare a Single-Step Income Statement for the Lotu Wo Company.

problem 4 - Income Statement (Multiple-Step) Prepare a Multiple-Step Income Statement based on the information presented in problem 4 above.

problem 5 - Uncollectible Accounts    
The Olympic Company has an accounts receivable balance at December 31, 2010 of $159,548.00.  The existing balance in the Allowance for Uncollectible Accounts was a credit of $2,563.94.  The company had net sales during 2010 of $789,933.00. Prepare the adjusting entry at December 31, 2010 to record the estimated uncollectible accounts under each of the following assumptions:

a)  The company uses the percentage of receivables method and estimates that 3% of their accounts receivables will not be collectible.
b)  The company uses the percentage of sales method and estimates that 1% of their net      sales will be uncollectible.                                
problem 6 - Inventory Valuation

Kauai Surf Company sells high-end surfboards to tourists.  The inventory is purchased from a manufacturer in Honolulu. At the beginning of 2010, the company had 20 surfboards on hand which they had purchased at a cost of $50 each.  During 2010, they purchased an additional 40 surfboards at a cost of $60 each on June 12 and another 70 surfboards at a cost of $80 each.  At the end of the year, there were 30 unsold surfboards in ending inventory.  The company uses the periodic method of inventory. For each of the following inventory valuation methods, determine (a) the ending inventory value and (b) the cost of goods sold:

a) FIFO                                            
b) LIFO                        
c) Weighted Average Cost

problem 7- Interest Calculations

find out the amount of interest for each of the following independent situations (assume 365 days per year):

a)  $400,000 is borrowed at 6% interest for 1 year.                              
b)  $50,000 is borrowed at an annual interest rate of 4% for 60 days.
c)  $120,000 is borrowed at an annual interest rate of 7% for 275 days.                                    
                                
problem 8 - Perpetual and Periodic inventory

a)  Describe the difference between the perpetual inventory method and the periodic inventory method.                                
b)  Indicate for what types of inventory would each of the two inventory methods would be appropriate.

problem 9 - Closing Entries

a)  Describe the nature of Closing Entries.  I.e. what is the purpose of closing entries?

b)  For each of the following accounts, indicate whether it is closed at the end of the year:

a) Salaries Expense
b)  Accounts Receivable                            
c)  Sales Revenues                            
d)  Retained Earnings                            
e)  Cash                            
f)  Rent Expense                            
g)  Interest income                            
h)  Accounts Payable                            
i)  Depreciation Expense                            
j)  Notes Payable

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91015

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