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

QUESTION

Q 1. The trial balance before adjustment of XYZ Company reports the following balances:Dr.$100,000Accounts receivableAllowance for doubtful accountsSales (all on credit)Sales returns and allowancesCr.$ 2,500750,00040,000InstructionsPrepare the entries for estimated bad debts assuming that doubtful accounts are estimatedto 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 1142481029BalancePurchasedPurchasedSoldSoldSold1,400 units @ $24900 units @ $36700 units @ $30400 units @ $501,000 units @ $40500 units @ $44Perpetual inventories are maintained in units only.InstructionsWhat is the cost of the ending inventory for item 29 under the following methods? (Showcalculations.)(a) FIFO.(b) Average Cost.Q3Ahmed Co. records purchase discounts lost and uses perpetual inventories. Prepare journalentries 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 profitis 40% of selling price.InstructionsCompute the cost of ending inventory.

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