Part A -
Here are several T-account balances that the Absalom Company has in its ledger at the end of the current year before a physical inventory count is to be taken.
Advertising expense - $22,000
Rent expense - 46,000
Purchase of inventory - 332,000
Sales - 696,000
Inventory January 1 - 77,000
Transportation - in - 8,000
Purchase Discounts - 14,000
a. What was the amount of goods available for sale for this company?
b. If the company counts its ending inventory and finds merchandise costing $84,000, what should be reported as cost of goods sold for the year?
c. What adjusting entry should Absalom make at the end of the current year to record cost of goods sold and ending inventory?
Part B -
Assume that you take a job as a summer employee for an investment advisory service. One of the partners for that firm is currently looking at the possibility of investing in eBay Inc. The partner is a bit concerned about the impact of the recession on this company, especially its accounts receivable. The partner asks you to look at the 2010 financial statements for eBay Inc. by following this path:
1. Go to ebay site
2. At the bottom of this screen, click on "Company Info."
3. On the left side of the next screen, click on "Investors."
4. On the left side of the next screen, click on "Annual Reports & Proxy."
5. In the center of the next screen, click on "2010 Annual Report" to download.
6. Go to page 86 and find the December 31, 2009, and December 31, 2010, balance sheets.
7. Go to page 87 and find the income statement for the year ended December 31, 2010.
8. Go to page 94 and read the note about the composition of the allowance for doubtful accounts.
1. Using the figures found on the balance sheet and the income statement, determine the number of days eBay takes to collect its receivables at the end of 2010.
2. Using the figures found on the balance sheet and the income statement, determine the receivables turnover for eBay during 2010.
3. Using the figures found in the balance sheet and the information in the notes, determine the percentage of receivables as of December 31, 2010 that are expected to be uncollectible.