1. Avett Furniture Store has credit sales of $400,000 in 2014 and a debit balance of $600 in the Allowance for Doubtful Accounts at year end. As of December 31, 2014, $130,000 of accounts receivable remain uncollected. The credit manager prepared an aging schedule of accounts receivable and estimates that $7,000 will prove to be uncollectible. On March 4, 2015, the credit manager authorizes a write-off of the $1,200 balance owed by B. Fernitti.

Instructions

1) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2014.

2) Show the balance sheet presentation of accounts receivable on December 31, 2014.

3) On March 4, before the write-off, assume the balance of Accounts Receivable account is $160,000 and the balance of Allowance for Doubtful Accounts is a credit of $3,000.

Make the appropriate entry to record the write-off of the Ferntti account. Also show the balance sheet presentation of accounts receivable before and after the write-off.

2.

XYZ Company buys and sells cabinets and drawers for the last 5 years at their Michigan outlet. XYZ Company the furniture from the wholesaler and then sells the furniture to the customers from their retail outlet at Michigan The following information is for XYZ Company for the month ended July 30 2017. Date July 1 July 8 July 21 July 27 Description Quantity Opening Inventory 50 Purchase 230 Purchase 80 Purchase 40 Unit Cost 100 76 110 100 Sales 350 units XYZ Company uses the periodic method for inventory. Required: (1) Calculate Ending Inventory and Cost of Goods sold, under each of the following methods. (1) LIFO. (2) FIFO. (3) Average cost. Prove the amount allocated to cost of goods sold under the LIFO and FIFO method (2) From your calculations, analyze which method results in (1) The highest ending inventory, and (2) The highest cost of goods sold