Financial Accounting Fundamentals Homework

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.)
 

July 1 Purchased merchandise from Boden Company for $6,600 under credit terms of 2/15, n/30, FOB shipping point, invoice dated July 1.
  2 Sold merchandise to Creek Co. for $950 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $550.
  3 Paid $120 cash for freight charges on the purchase of July 1.
  8 Sold merchandise that had cost $1,900 for $2,300 cash.
  9 Purchased merchandise from Leight Co. for $2,600 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9.
  11 Received a $600 credit memorandum from Leight Co. for the return of part of the merchandise purchased on July 9.
  12 Received the balance due from Creek Co. for the invoice dated July 2, net of the discount.
  16 Paid the balance due to Boden Company within the discount period.
  19 Sold merchandise that cost $1,200 to Art Co. for $1,800 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19.
  21 Issued a $300 credit memorandum to Art Co. for an allowance on goods sold on July 19.
  24 Paid Leight Co. the balance due, net of discount.
  30 Received the balance due from Art Co. for the invoice dated July 19, net of discount.
  31 Sold merchandise that cost $5,400 to Creek Co. for $6,900 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.
 
NoDateGeneral JournalDebitCredit
1July 01Merchandise inventory6,600
Accounts payable—Boden6,600
2July 02Accounts receivable—Creek950
Sales950
3July 02Cost of goods sold550
Merchandise inventory550
4July 03Merchandise inventory120
Cash120
5July 08Cash2,300
Sales2,300
6July 08Cost of goods sold1,900
Merchandise inventory1,900
7July 09Merchandise inventory2,600
Accounts payable—Leight2,600
8July 11Accounts payable—Leight600
Merchandise inventory600
9July 12Cash931
Sales discounts19
Accounts receivable—Creek950
10July 16Accounts payable—Boden6,600
Merchandise inventory132
Cash6,468
11July 19Accounts receivable—Art1,800
Sales1,800
12July 19Cost of goods sold1,200
Merchandise inventory1,200
13July 21Sales returns and allowance300
Accounts receivable—Art300
14July 24Accounts payable—Leight2,000
Merchandise inventory40
Cash1,960
15July 30Cash1470
Sales discounts30
Accounts receivable—Art1,500
16July 31Accounts receivable—Creek6,900
Sales6,900
17July 31Cost of goods sold5,400
Merchandise inventory5,400

Perpetual: Alternative cost flows

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

 DateActivitiesUnits Acquired at CostUnits Sold at Retail
 Jan.1 Beginning inventory 600units@ $60 per unit    
 Feb.10 Purchase 400units@ $57 per unit    
 Mar.13 Purchase 150units@ $45 per unit    
 Mar.15 Sales     750units@ $85 per unit
 Aug.21 Purchase 150units@ $65 per unit    
 Sept.5 Purchase 450units@ $61 per unit    
 Sept.10 Sales     630units@ $85 per unit
    Totals 1,750units  1,380units 

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



Cost of goods available for sale$102,750
Number of units available for sale1,750units

2. Compute the number of units in ending inventory.

Ending inventory370units

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.)

Perpetual FIFO:
Goods PurchasedCost of Goods SoldInventory Balance
Date# of unitsCost per unit# of units soldCost per unitCost of Goods Sold# of unitsCost per unitInventory Balance
Jan 1600@$60.00=$36,000.00
Feb 10400@$57.00600@$60.00=$36,000.00
400@$57.00=22,800.00
$58,800.00
Mar 13150@$45.00600@$60.00=$36,000.00
400@$57.00=22,800.00
150@$45.00=6,750.00
$65,550.00
Mar 15600@$60.00=$36,000.00250@$57.00=$14,250.00
150@$57.00=8,550.00150@$45.00=6,750.00
$44,550.00$21,000.00
Aug 21150@$65.00250@$57.00=$14,250.00
150@$45.00=6,750.00
150@$65.00=9,750.00
$30,750.00
Sept 5450@$61.00250@$57.00=$14,250.00
150@$45.00=6,750.00
150@$65.00=9,750.00
450@$61.00=27,450.00
$58,200.00
Sept 10250@$57.00=$14,250.000
150@$45.00=6,750.000
150@$65.00=9,750.000
80@$61.00=4,880.00370@$61.00=22,570.00
$35,630.00$22,570.00
Totals$80,180.00$22,570.00
 

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

Perpetual LIFO:
Goods PurchasedCost of Goods SoldInventory Balance
Date# of unitsCost per unit# of units soldCost per unitCost of Goods Sold# of unitsCost per unitInventory Balance
Jan 1600@$60.00=$36,000.00
Feb 10400@$57.00600@$60.00=$36,000.00
400@$57.00=22,800.00
$58,800.00
Mar 13150@$45.00600s@$60.00=$36,000.00
400@$57.00=22,800.00
150@$45.00=6,750.00
$65,550.00
Mar 15200selected answer incorrect@$45.00=$9,000.00400@$60.00=$24,000.00
400@$57.00=22,800.000
150selected answer incorrect@$60.00=9,000.00
$40,800.00$24,000.00
Aug 21150@$65.00400@$60.00=$24,000.00
150@$65.00=9,750.00
$33,750.00
Sept 5450@$61.00400@$60.00=$24,000.00
150@$65.00=9,750.00
450@$61.00=27,450.00
$61,200.00
Sept 10450@$61.00=$27,450.00370selected answer incorrect@$60.00=$22,200.00
150@$65.00=9,750.000
37,200
Totals$78,000.00$22,200.00
 

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

Weighted Average Perpetual:
Goods PurchasedCost of Goods SoldInventory Balance
Date# of unitsCost per unit# of units soldCost per unitCost of Goods Sold# of unitsCost per unitInventory Balance
Jan 1600@$60.00=$36,000.00
1
Feb 10400@$57.00600@$60.00=$36,000.00
400@$57.00=22,800.00
Average1,000@$58.80selected answer correct=$58,800.00
Mar 13150@$45.001,000@$58.80=$58,800.00
150@$45.00=6,750.00
1,150@$57.00selected answer correct=$65,550.00
Mar 15750@$57.00=$42,750.00400@$57.00selected answer correct=$22,800.00
Aug 21150@$65.00400@$57.00=$22,800.00
150@$65.00selected answer correct=9,750.00
Average550@$59.18selected answer correct=$32,550.00
Sept 5450@$61.00550@$59.18=$32,549.00
450@$61.00=27,450.00
1,000@$59.99selected answer incorrect=$59,999.00
Sept 10630@$59.99selected answer incorrect=$37,793.70370@$59.99selected answer incorrect=$22,196.30
Totals$80,543.70
 

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.)

Specific Identification:
Goods PurchasedCost of Goods SoldInventory Balance
Date# of unitsCost per unit# of units soldCost per unitCost of Goods Sold# of unitsCost per unitInventory Balance
January 1600@$60.00=$36,000.00
February 10400@$57.00600@$60.00selected answer correct=$36,000.00
400@$57.00=22,800.00
$58,800.00
March 13150@$45.00600@$60.00=$36,000.00
400@$57.00=$22,800.00
150@$45.00=$6,750.00
$65,550.00
March 15600@60.00=36,000250@$57.00=$14,250.00
150@57.00=8,550150@$45.00=6,750.00
$44,550.00$21,000.00
Aug 21150@$65.00250@$57.00=$14,250.00
150@$45.00=6,750.00
150@$65.00=9,750.00
$30,750.00
Sep 5450@$61.00250@$57.00=$14,250.00
150@$45.00=6,750.00
150@$65.00=9,750.00
450@$61.00=27,450.00
$58,200.00
Sep 10180@$57.00=$10,260.0070@$57.00=$3,990.00
150@$45.00=6,750.0050@$65.00=3,250.00
100@$65.00=6,500.00250@$61.00=15,250.00
200@$61.00=12,200.00
$35,710.00$22,490.00
Totals$80,260.00$22,490.00
 

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.)

FIFOLIFOWeighted AverageSpecific Identification
Sales$117,300$117,300$117,300$117,300
Less: Cost of goods sold80,18078,000selected answer incorrect80,54480,260
Gross profit$37,120$39,300not attempted$36,756$37,040

Financial Accounting Fundamentals Homework

Required information

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.
 

BRANCH COMPANY
Bank Reconciliation
July 31, 2017
Bank statement balance$26,679Book balance$25,642
Add:Add:
Deposit of July 31$11,152Proceeds of note less collection charge$9,950
11,1529,950
37,83135,592
Deduct:Deduct:
Check No. 30311,010NSF check805
Check No. 3065281Service charge15
Check No. 30691,778Error (Check 3056)10
3,069830
Adjusted bank balance$34,762Adjusted book balance$34,762

Financial Accounting Fundamentals Homework

Required information

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.)
 

NoTransactionGeneral JournalDebitCredit
1a.No journal entry required
2b.No journal entry required
3c.Rent expense10
Cash10
4d.Cash9,950
Collection expense50
Notes receivable10,000
5e.Accounts receivable—E. Shaw805
Cash805
6f.Miscellaneous expenses15
Cash15
7g.No journal entry required

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.
 

    
Cash sales$1,763,510 
Credit sales 3,606,000 

 
In addition, its unadjusted trial balance includes the following items.
 

    
Accounts receivable$1,092,618debit
Allowance for doubtful accounts 22,170debit


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).
  

NoTransactionGeneral JournalDebitCredit
1a.Bad debts expense72,120
Allowance for doubtful accounts72,120
2b.Bad debts expense53,695
Allowance for doubtful accounts53,695
3c.Bad debts expense76,801
Allowance for doubtful accounts76,801

Homepage