1.
Beginning inventory, purchases, and sales data for tennis rackets are as follows:
April | 3 | Inventory | 21 units | @ | $17 | |
11 | Purchase | 12 units | @ | $17 | ||
14 | Sale | 16 units | ||||
21 | Purchase | 14 units | @ | $19 | ||
25 | Sale | 17 units |
Complete the inventory cost card assuming the business maintains a perpetual inventory system and determine the cost of goods sold and ending inventory using LIFO.
Purchases | Cost of Goods Sold |
Inventory | |||||||||
Date | Qty. | Unit Cost | Total Cost | Qty. | Unit Cost | Total Cost | Qty. | Unit Cost | Total Cost | ||
April 3 | $ | $ | |||||||||
11 | $ | $ | $ | $ | |||||||
$ | |||||||||||
14 | $ | $ | $ | $ | |||||||
$ | |||||||||||
21 | $ | $ | $ | $ | |||||||
$ | |||||||||||
25 | $ | $ | $ | $ | |||||||
$ | |||||||||||
Total Cost of goods sold | $ | Ending inventory value |
$ |
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2.
Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables.
April 1 | Sold merchandise on account to Jim Dobbs, $6,900. The cost of goods sold is $4,600. |
June 10 | Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder. |
Oct. 11 | Reinstated the account of Jim Dobbs and received cash in full payment. |
If an amount box does not require an entry, leave it blank.
April 1 | |||
April 1 | |||
June 10 | |||
Oct. 11 | |||
Oct. 11 | |||
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3.
Equipment was acquired at the beginning of the year at a cost of $78,660. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,920.
Required:
a. | What was the depreciation expense for the first year? |
b. | Assuming the equipment was sold at the end of the second year for $59,486, determine the gain or loss on sale of the equipment. |
c. | Journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles. |
Complete the inventory cost card assuming the business maintains a perpetual inventory system and determine the cost of goods sold and ending inventory using LIFO.
Purchases | Cost of Goods Sold |
Inventory | |||||||||
Date | Qty. | Unit Cost | Total Cost | Qty. | Unit Cost | Total Cost | Qty. | Unit Cost | Total Cost | ||
April 3 | 21 | $17 | $357 | ||||||||
11 | 12 | $17 | $204 | 21 | $17 | $357 | |||||
12 | $17 | 204 | |||||||||
14 | 12 | $17 | $204 | 17 | $17 | $289 | |||||
4 | $17 | 68 | |||||||||
21 | 14 | $19 | $266 | 17 | $17 | $289 | |||||
14 | $19 | 266 | |||||||||
25 | 14 | $19 | $266 | 14 | $17 | $238 | |||||
3 | $17 | 51 | |||||||||
Total Cost of goods sold | $589 | Ending inventory value |
$238 |
2) Journal entry
If an amount box does not require an entry, leave it blank.
April 1 | Account receivable | 6900 | |
Sales revenue | 6900 | ||
April 1 | Cost of goods sold | 4600 | |
Inventory | 4600 | ||
June 10 | Cash | 2300 | |
Allowance for doubtful account | 4600 | ||
Account receivable | 6900 | ||
Oct. 11 | Account receivable | 4600 | |
Allowance for doubtful account | 4600 | ||
Oct 11 | Cash | 4600 | |
Account receivable | 4600 |
3a) Depreciation expense = (78660-7920/6) = 11790
3b) Gain (loss) = 59486-(78660-11790-11790) = 4406
3c) Journal entry
Date | account and explanation | Debit | Credit |
Cash | 59486 | ||
Accumulated depreciation | 23580 | ||
Gain on sale of equipment | 4406 | ||
Equipment | 78660 |
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