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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
Cash received                                                      1,306, 123
Write-offs                                                         x = 2553
End. Balance                           197,719

b)                                             Allowance for bad debts
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
         Allowance for bad debts $2,553
                A/R                            $2,553
         Bad debt expens e              $3,778
                Allowance                      $3,778

d)
                                               Allowance for bad debts
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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