### Financial Accounting Fundamentals Homework – Week 3 (ACC201)

This lesson contains questions from financial accounting fundamentals homework from week 3.

#### Preparing journal entries for merchandising activities-perpetual system

Prepare journal entries to record the following merchandising transactions of Cabela’s, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable—Boden.)

#### Perpetual: Alternative cost flows

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions

Required:
1.
Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold consist of 600 units from beginning inventory, 330 from the February 10 purchase, 150 from the March 13 purchase, 100 from the August 21 purchase, and 200 from the September 5 purchase. (Round your average cost per unit to 2 decimal places.)

#### Complete this question by entering your answers in the tabs below.

Compute the cost assigned to ending inventory using FIFO. (Round your average cost per unit to 2 decimal places.)

#### Last In First Out – LIFO

Compute the cost assigned to ending inventory using LIFO. (Round your average cost per unit to 2 decimal places.)

#### Weighted Average – Ending Inventory

Compute the cost assigned to ending inventory using weighted average. (Round your average cost per unit to 2 decimal places.)

#### Specific Identification – Ending Inventory

Compute the cost assigned to ending inventory using specific identification. For specific identification, units sold consist of 600 units from beginning inventory, 330 from the February 10 purchase, 150 from the March 13 purchase, 100 from the August 21 purchase, and 200 from the September 5 purchase. (Round your average cost per unit to 2 decimal places.)

#### Gross Profit

4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.)

### Financial Accounting Fundamentals Homework

#### Preparing a bank reconciliation and recording adjustments

[The following information applies to the questions displayed below.]

The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017.

1. On July 31, the company’s Cash account has a \$25,642 debit balance, but its July bank statement shows a \$26,679 cash balance.
2. Check No. 3031 for \$1,010 and Check No. 3040 for \$497 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for \$281 and Check No. 3069 for \$1,778, both written in July, are not among the canceled checks on the July 31 statement.
3. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent expense was correctly written and drawn for \$1,290 but was erroneously entered in the accounting records as \$1,280.
4. The July bank statement shows the bank collected \$10,000 cash on a noninterest-bearing note for Branch, deducted a \$50 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement.
5. The bank statement shows an \$805 charge for a \$795 NSF check plus a \$10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
6. The July statement shows a \$15 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
7. Branch’s July 31 daily cash receipts of \$11,152 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

### Part 1

Required:

1.
Prepare the bank reconciliation for this company as of July 31, 2017.

### Financial Accounting Fundamentals Homework

#### Preparing a bank reconciliation and recording adjustments

[The following information applies to the questions displayed below.]

The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017.

1. On July 31, the company’s Cash account has a \$25,642 debit balance, but its July bank statement shows a \$26,679 cash balance.
2. Check No. 3031 for \$1,010 and Check No. 3040 for \$497 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for \$281 and Check No. 3069 for \$1,778, both written in July, are not among the canceled checks on the July 31 statement.
3. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent expense was correctly written and drawn for \$1,290 but was erroneously entered in the accounting records as \$1,280.
4. The July bank statement shows the bank collected \$10,000 cash on a noninterest-bearing note for Branch, deducted a \$50 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement.
5. The bank statement shows an \$805 charge for a \$795 NSF check plus a \$10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
6. The July statement shows a \$15 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
7. Branch’s July 31 daily cash receipts of \$11,152 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

#### Part 2

2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of July 31, 2017. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)

#### Estimating and reporting bad debts

[The following information applies to the questions displayed below.]

At December 31, 2017, Hawke Company reports the following results for its calendar year.

To recognize bad debts under each of the following independent assumptions.

1. Bad debts are estimated to be 2% of credit sales.
2. Bad debts are estimated to be 1% of total sales.
3. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.

#### Part 1

Required:
1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions.

1. Bad debts are estimated to be 2% of credit sales.
2. Bad debts are estimated to be 1% of total sales.
3. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.

Adjusting entries (all dated December 31, 2017).