ACCOUNTING-The trial balance before adjustment of XYZ Company reports

QUESTION

Q
1. The trial balance before adjustment of XYZ Company reports the following
balances:

Dr.
Cr.
Accounts receivable $100,000
Allowance for doubtful accounts $ 2,500
Sales (all on credit) 750,000
Sales returns and allowances 40,000

Instructions
Prepare
the entries for estimated bad debts assuming that doubtful accounts are
estimated to be (1) 6% of gross accounts receivable and (2) 1% of net sales.

Q2.
During June, the following changes in inventory item 29 took place:

June 1 Balance 1,400
units @ $24
14 Purchased 900
units @ $36
24 Purchased 700
units @ $30
8 Sold 400
units @ $50
10 Sold 1,000
units @ $40
29 Sold 500
units @ $44
Perpetual inventories are maintained in units only.

Instructions
What is the cost of the ending inventory for item 29 under the following
methods? (Show calculations.)
(a) FIFO.
(b) Average
Cost.

Q3Ahmed Co.
records purchase discounts lost and uses perpetual inventories. Prepare journal entries in general journal
form for the following:
(a) Purchased
merchandise costing $900 with terms 2/10, n/30.
(b) Payment
was made thirty days after the purchase.

Q4. Sales and
purchases of company XYZ for the year 2010 had been $1,400,000 and $980,000,
respectively. The beginning inventory (Jan. 1, 2010) was $170,000; XYZ’s gross
profit is 40% of selling price.

Instructions
Compute the cost of ending inventory.

ANSWER:

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