1. Compute the ending inventory using the FIFO and the weighted average method below. Use the perpetual method for both.
|
|
units
|
price
|
|
1-Jan
|
Beginning inventory
|
3,500
|
$ 3.00
|
|
14-Jan
|
Bought
|
1,500
|
$ 3.15
|
|
5-Feb
|
Sold
|
1,000
|
|
|
22-Feb
|
Bought
|
2,000
|
$ 3.20
|
|
7-Mar
|
Sold
|
1,500
|
|
|
15-Mar
|
Sold
|
2,000
|
|
|
5-Apr
|
Bought
|
1,000
|
$ 3.25
|
|
10-Apr
|
Sold
|
800
|
|
|
12-Apr
|
Sold
|
800
|
|
|
22-Apr
|
Sold
|
500
|
|
|
4-May
|
Sold
|
600
|
|
|
10-May
|
Bought
|
2,000
|
$ 3.30
|
|
25-May
|
Sold
|
500
|
|
FIFO method (scroll down for Weighted Average entry area)
|
Balance
|
|
units
|
cost
|
total
|
|
3500
|
$ 3.00
|
$ 10,500.00
|
2. Complete journal entries for the following transactions related to accounts receivable and the allowance for doubtful accounts:
1. Sales for the month of June were $75,000. Using a percentage allowance method of 1% record the allowance for doubtful accounts.
2. On June 30, it was determined that two customers with receivables totaling $980 were not likely to pay.
3. On July 15, surprisingly one of the customers who owed $400 and was written off on June 30, paid their bill.
4. On July 31, our fiscal year ends, the allowance for doubtful accounts has a balance of $1,780
The company uses an aging method to calculate the desired allowance balance.
An accounts receivable aging shows the following:
30 days or less = $68,500
31 -60 days = $10,400
61-90 days = $4,300
Over 90 days = $1,200
The company wants an ending reserve equal to:
30 days or less = 1%
31-60 days = 3%
61-90 days = 5%
over 90 days = 15%