Question

1. On June 30, 2019, ABC Company sold some merchandise to a customer for $68,000. ABC company accepted a 12% note from customer requiring the payment of interest and principal on March 31, 2020. The 12% rate is appropriate in this situation. Required: A- Prepare joumal at June 30, 2019 to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold B-Prepare journal entry at December 31, 2019 for interest accrual. C- Prepare Journal Entry at March 31, 2020 to record the collection of the Note and interest. 2. At the end of the year, inventory has a cost of $250.000 and a net realizable value of $200,000 due to normal business circumstances. • Prepare the year-end adjusting entry, if any, for inventory using the lower of cost or net realizable value approach. 250,000-200.000 - 50,000 B. At the end of the year, inventory has a cost of $250,000, net realizable value of $200,000, replacement cost of $150,000, and normal profit margin of $25,000. Assuming normal business circumstances • Prepare the year-end adjusting entry, if any, for inventory using the lower of cost or market approach. 200,000 - 25,00u - 185,000 2co Solis $ 120,000 $ 168,000 3. Beginning inventory at retail Beginning inventory at cost Purchases during the year at cost $100,000 Purchases during the year at retail $250,000 Sales during the year $190,000 What is the estimate of ending inventory using the Average cost retail method? 4-JM Company uses average cost and a perpetual system. On January 1, the company had 600 units of inventory at an average cost of $55 per unit for a total cost of $33,000. The company purchased and sold inventory during the month as follows: Purchases: January 10: 1,000 units at $59 = $59,000

Answer 1

1.

Date	Account	Debit	Credit
June 30	Notes Receivable	68,000
	Sales revenue		68,000
Dec 31	Interest receivable	4,080
	Interest revenue		4,080
	(68,000*12%*6/12)
Mar 31	Cash	74,120
	Interest receivable		4,080
	Interest revenue (68,000*12%*3/12)		2,040
	Notes Receivable		68,000