Acc 201 Exam Number 2 – extra credit

Acc 201
Exam Number 2 – extra credit
October 19, 2011
Name _______________________

14. Wolf Camera Shop Inc. uses the lower-of-cost-or-market basis for its inventory. The following data are available at December 31.

Market
Units Cost/Unit Value/Unit
Cameras
Minolta 5 $175 $165
Canon 7 148 152
Light Meters
Vivitar 15 125 119
Kodak 10 115 135

Instructions
What amount should be reported on Wolf Camera Shop’s financial statements, assuming the lower-of-cost-or-market rule is applied?

15. Johnson Company reports the following for the month of June (assume periodic inventory) .

Date Explanation Units Unit Cost Total Cost
June 1 Inventory 225 $5 $1,125
12 Purchase 525 6 3,150
23 Purchase 750 7 5,250
30 Inventory 270

(a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average cost.

16. Plato Company reports the following for the month of June.

Date Explanation Units Unit Cost Total Cost
June 1 Inventory 225 $5 $1,125
12 Purchase 525 6 3,150
15
23 Sale
Purchase (570)
750
7
5,250
30 Inventory 930

Instructions
(a) Calculate the cost of the ending inventory and the cost of goods sold for each cost flow assumption, using a perpetual inventory system. Assume a sale of 570 units occurred on June 15 for a selling price of $8. (Note: For the average-cost method, round unit cost to three decimal places.)

17. The information below relates to the Cash account in the ledger of Remington Company.
Balance September 1—$25,725 Cash deposited—$96,000.
Balance September 30—$26,100 Checks written—$95,620.

The September bank statement shows a balance of $24,635 on September 30 and the following memoranda.

Credits Debits
Collection of $2250 note plus interest $50 $2,300 NSF check: J. E. Hoover $635
Interest earned on checking account $65 Safety deposit box rent $75

At September 30, deposits in transit were $6,695, and outstanding checks totaled $3,575.

Instructions
Prepare the bank reconciliation at September 30.

19. The management of Morton Company estimates that credit sales for August, September, October, and November will be $180,000, $210,000, $230,000, and $160,000, respectively. Experience has shown that collections are made as follows:

In month of sale 25%
In first month after sale 60%
In second month after sale 10%

Instructions
Determine the collections from customers in October and November. Show all computations.

20. Erickson Company had a $400 credit balance in Allowance for Doubtful Accounts at December 31, 2010, before the current year’s provision for uncollectible accounts. An aging of the accounts receivable revealed the following:
Estimated Percentage
Uncollectible
Current Accounts $140,000 1%
1–30 days past due 15,000 3%
31–60 days past due 12,000 6%
61–90 days past due 5,000 12%
Over 90 days past due 7,000 30%
Total Accounts Receivable $179,000
Instructions
(a) Prepare the adjusting entry on December 31, 2010, to recognize bad debts expense.