# Acct 3311 MQ1-Fall03 Solutions

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```					Acct 3311 MQ2-SS 04 Solutions
Problem 1
1. C   2. B   3. D   4. D     5. D             6. C    7. C      8. B    9. B    10. B
11. C 12. A 13. A 14. A 15. D                  16. D   17. A     18. A   19. A   20. C

Problem 2
A.
a)                                                     Accts Receivable
Beg balance                            210,555
Credit Sales                           1,295, 840
Write-offs                                                         x = 2553
End. Balance                           197,719

Beg. Balance                                                     12,755
Write-offs                             2,553
Bad debt expens e                                                  X = 3,778
End. balance                                                       13,980

Henc e, the percentage applied for bad debt expense as a function of sales
= 3,778/1,295,840  0.29%

c)       A/R                                   \$1,295,840
Sales                                \$1,295,840
Cash                                  \$1,306,123
A/R                                    \$1,306,123
A/R                            \$2,553
Allowance                      \$3,778

d)
Beg. Balance                                                     12,755
Write-offs                             2,553
Bad debt expens e                                                  X = 9,570
End. balance                                                       19,772

Bad debt expens e           = \$9,570

B.       a) A/R            \$34,650
Sales          \$34,650
b) Cash         \$34,650
Sales discount 350
A/R             \$35,000

Part B
Cash                               395,000
Financing Expense                    5,000
Liability - financing arrangement         400,000

Cash                                 300,000
Accounts receivable                      300,000
Interest expense                    4,000         (\$400,000 x .12 x 1/12)
Liability - financing arrangement 300,000
Cash                              304,000

Problem 3

Part A
Apr. 12      Inventory                     15,000
Accounts payable                         15,000
Apr. 13      Inventory                        300
Accounts payable                             300
Apr. 15      Accounts payable               1,000
Inventory                                  1,000
Apr. 20      Accounts payable              14,000
Inventory                                    280
Cash (\$14,000 x .98)                     13,720
Accounts payable                 300
Cash                                         300
Part B          Unit cost of first sale = \$50
Unit cost of second sale = (50*50 +40*51)/90 = \$50.44
Unit cost of third sale = (60*50.44 + 40*52)/100 = \$ 51. 06
Cost of Goods sold = 30*50 + 30* 50.44 + 45*51.06 = \$5, 311
Ending Inventory       = 55*51.06 = \$2,808

Part C
Inventory     Cost    Inv at base     Inventory         Inventory layers     Ending
at Year-      Index   year cost       layers at base    converted            Inventory at
end cost                              yr                                     DVL cost
\$80,000       1.0     \$80,000         \$80,000           \$80,000              \$80,000
\$115,000      1.05    \$109,524        \$80,000           \$80,000*1
\$ 29,524          \$29,524*1.05         \$111,000
\$108,000      1.20    \$90,000         \$80,000           \$80,000*1
\$10,000           \$10,000*1.05         \$90,500
\$122,000      1.30    \$93,846         \$80,000           \$80,000*1
\$10,000           \$10,000*1.05
\$ 3,846           \$3,846*1. 30         \$95,500

Problem 4
Cost to retail ratio (last yr) = CGAS C /CGAS R = 460/736 = 0.625
Cost to retail ratio (current yr) = CGAS C /CGAS R = 1377/2245.3 = 0.6133
EIC = EIR * cost to retail ratio = 736K*0.625 + 63.5K*0. 6133 = \$498, 944
CGS = BIC + PC – EIC = 460K +1377K – 498.944 = \$1,338,056

Or if you noticed that net sales should have included the sales returns than you should the
following res ults:
Cost to retail ratio (current yr) = CGAS C /CGAS R = 1377/2245.3 = 0.6133
EIC = EIR * cost to retail ratio = 736K*0.625 + 18.5K*0. 6133 = \$471, 346
CGS = BIC + PC – EIC = 460K +1377K – 471.346K = \$1,365,654

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 views: 29 posted: 12/19/2010 language: English pages: 2