Problem I -
Journal Entries for Bad Debt Expense
A trial balance before adjustment included the following:
|
Debit
|
Credit
|
|
Accounts receivable
|
$120,000
|
|
|
Allowance for doubtful accounts
|
|
$730
|
|
Sales
|
|
$510,000
|
|
Sales returns and allowances
|
$8,000
|
|
Give journal entries assuming that the estimate of uncollectible is determined by taking the value as given below:
- 5% of gross accounts receivable.
- 1% of net sales.
Problem II -
Lower-of-cost-or-market Computations
The December 31, 2012 inventory of Gwynn Company consisted of four products, for which certain information is provided below:
|
Product
|
Original
Cost
|
Replacement
Cost
|
Estimated
Disposal
Cost
|
Expected
Selling
Price
|
Normal
Profit
on Sales
|
|
A
|
$25.00
|
$22.00
|
$6.50
|
$37.50
|
20%
|
|
B
|
$42.00
|
$40.00
|
$12.00
|
$48.00
|
25%
|
|
C
|
$120.00
|
$115.00
|
$25.00
|
$160.00
|
30%
|
|
D
|
$16.00
|
$15.80
|
$3.00
|
$22.00
|
10%
|
Using the lower-of-cost-or-market approach applied on an individual-item basis, you are required to do the following: Compute the inventory valuation that should be reported for each product on December 31, 2012.
Problem III -
Value of Inventory Computation by Gross Profit Method
On December 31, 2012, Felt Company's inventory burned. Sales and purchases for the year had been $1,600,000 and $980,000, respectively. The beginning inventory (Jan. 1, 2012) was $170,000; in the past Felt's gross profit has averaged 40% of selling price.
Using the above information, you are required to do the following:
Compute the estimated cost of inventory burned.
Give entries as of December 31, 2012 to close merchandise accounts.
Support your responses with examples.
Cite any sources in APA format.