1. Baker Company has the following items related to cash on its trial balance on December 31 of the current year: Cash in Drawer Checking Prime Bank $ 1.500,00 Checking-Harvest Bank 26,675.00 (1.975.25) Checking National Bank 50,950.00 Treasury Bills Maturity Date, March 1 15,000.00 Treasury Bills Maturity Date. July 1. next year 20,000.00 Sinking Fund for Bond Redemption in 5 years 125.050.00 *S15,000.00 represents a compensating balance for a $200,000 loan due in three years. This amount cannot be withdrawn. Please prepare the appropriate financial statement disclosures for the above amounts on Baker's balance sheet. Assume that Baker uses Generally Accepted Accounting Principles for reporting cash. 2. McCabe Industries is preparing to estimate its allowance for uncollectible accounts at December 31 of the current year. Its current balance in Accounts Receivable is $270,000, and the Allowance for Doubtful Accounts is $10,000. Revenues for the current year were $1,250,000. All sales were on credit. Consider cach assumption separately. 1. Assume that McCabe uses the income statement (Percentage of net credit sales) approach and estimates that 4% of sales are uncollectible. Prepare the journal entry to record bad debt expense. 2. Assume that McCabe uses the balance sheet approach and assumes that 6% of accounts receivable are uncollectible. Prepare the journal entry to record bad debt expense 3. Assume that McCabe uses the balance sheet approach and ages its accounts receivable according to the schedule below: Age of Receivables Days) Amount Uncollectible Current (less than 30) $170,000 31-60 60,000 61-90 23,000 91-120 14,000 20 Over 120 3,000 Total $270,000 Complete the aging schedule and prepare the journal entry to record bad debt expense. 3. Ditfurth Corporation is needs an infusion of cash in order to purchase additional inventory. Thus, the corporation has decided to pledge $500,000 of receivables to the Last National Bank of Cimarron. The terms of the borrowing are as follows: The Corporation will receive $450,000 less a fee of 5% of total pledged receivables. The loan will have an annual interest rate of 10%. 1. Assume that the pledging transaction occurred on June 1. Record the journal entry for receipt of the loan proceeds. 2. Dittfurth received $400,000 during the month of June and remitted it to the bank along with the loan interest. Record the journal entries for these transactions. 4. Novice Industries has decided to factor $150,000 of accounts receivable to Able Financing Company. Able will remit 90% of the receivables to Novice immediately. It charges Novice a factoring fee of 3% that it will collect at the time it remits the remainder of the receivables. This holdback has an estimated fair value of $10,000. 1. Assume that this factoring arrangement is without recourse. Prepare the journal entry to record the transaction. 2. Assume that this factoring arrangement is with recourse with a $5,000 recourse liability. Prepare the journal entry to record the transaction. 3. The Wysocki Company has undertaken a physical count of inventory on hand on December 31, 2018. The cost of inventory on hand is $445,993. Additional information follows: 1. Wysocki Company received goods costing $32,000 on January 2, 2016. The goods were shipped f.o.b, shipping point, and left the seller's business on December 30, 2018. 2. Wysocki Company received goods costing $40,000 on January 3, 2016. The goods were shipped f.o.b. destination and left the seller's business on December 30, 2018. 3. Wysocki Company sold goods costing $20,000 on December 29, 2018. The goods were picked up by the common carrier on December 29 and shipped f.o.b. destination. The goods arrived on January 2, 2016. The retail price of goods was $30,000. 4. Wysocki Company sold goods costing $30,000 on December 31, 2018. The goods were picked up by the common carrier on December 31 and shipped f.o.b. shipping point. The goods were not included in Wysocki's physical count at December 31, 2018. The goods arrived on January 4, 2019. The retail price of the goods was $60,000. Wysocki paid the shipping costs of $433 on December 31. 5. Wysocki Company was the consignee for some goods from Walmart. The goods cost Walmart $100,000 and the retail price of $300,000. These goods were included in Wysocki's physical count on December 31, 2018 at the retail price. 6. Wysocki Company had some goods on consignment at Walmart. The goods cost $50,000 and had a retail price of $100,000. These goods were not included in Wysocki's physical count at December 31, 2018 because the goods were not on the company's premises. Required: 1. For each item listed above, indicate the amount and sign of the adjustment to the inventory balance at December 31, 2018. If no adjustment is required, for an item, enter 0. 2. Determine the correct amount of inventory for Wysocki Company at December 31, 2018. 6. Novelli's Nursery has developed the following data for lower of cost and net realizable valuation for products: Cosi $1,700 1.600 Selling Price Broad leaf trees: Ash $1,800 Beech 2,200 Needle leaf trees: Cedar $2,500 Fir 3,600 Fruit trees! Apple $ 1,800 Cherry 2,300 The costs to sell are 10% of selling price. $1,750 3,350 $1,400 1,800 Required: 1. Determine the reported inventory value assuming the lower of cost and net realizable value rule is applied to classes of trees. 2. Determine the reported inventory value assuming the lower of cost and net realizable value rule is applied to the entire inventory. 3. Determine the reported inventory value assuming the lower of cost and net realizable value rule is applied to individual trees. 7. A fire destroyed the inventory of Barber Company. The following information is available: Beginning inventory $50,000 Purchases $170,000 Net Sales Revenue $200,000 Gross Profit Percentage 30% Required: 1. Prepare a schedule to compute the amount of inventory lost in the fire using the gross profit method. 2. Prepare the required journal entry after the fire. 3. Assume that the goods are marked up 25% above cost. Compute the amount of inventory lost in the fire. 8. The following information is available for the month of June for a retail store: Sales $79,000 Sales Returns $1,000 Markups $10,000 Markup cancellations $1,000 Markdowns $9,300 Purchases (at cost) $40.000 Purchases (at retail) $107.000 Purchase returns (at cost) $1,200 Purchase returns (at retail) $2,000 Beginning inventory (at cost) $30,000 Beginning inventory (at retail) $46,000 Required: Calculate the ending inventory at cost using the basic retail method. Round ratios to four decimal places. (For example, 0.40127 -0.4013) 9. A department store wants to estimate the cost of ending inventory using the conventional retail method. Round ratios to four decimal places. For example, 0.43677 equals 0.4368. The following data is available: Sales Sales Returns Markups Markdowns Purchases (at cost) Purchases (at retail) Purchase returns (at cost) Purchase returns (at retail) Beginning inventory (at cost) Beginning inventory (at retail) $90,000 $1,000 $10,000 $9,000 $20,000 $50,000 $1,200 $2,000 $30,000 $46,000 Required: Using the conventional retail method, estimate the cost of ending inventory. 10. Infomania Corporation uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for the year 2018 is as follows: Cost Retail Beginning inventory $140,000 $280,000 Purchases 420,000 690,000 Freight in 16,000 Purchase returns 12,000 18,000 Net markups 24,000 Net markdowns 36,000 Normal spoilage 5,000 Sales 700,000 Sales returns 20,000 Employee discounts 6,000 The company records sales net of employee discounts. Required: Estimate Infomania's ending inventory and cost of goods sold for the year using the retail inventory method and the following applications: 1. Average cost. 2. Conventional. 11. The Petrowski Company uses the perpetual inventory system. The Petrowski Company has the following data available for the month of January: Unit Cost $100 $120 Date Jan. 1 Jan. 9 Jan. 10 Jan. 15 Jan. 18 Jan. 24 Jan. 30 Transaction Beginning inventory Purchase Sale Purchase Sale Purchase Sale Units 100 300 200 400 300 $140 100 $160 10 1. Determine the Cost of Goods Sold for January using the following methods: a. FIFO b. LIFO c. Moving-average (Round per unit costs and all other dollar amounts to two decimal places.) Assume that the unit sales price for the goods is $500. Further. assume that sales commissions are $10 per unit and general expenses are $10,000. Prepare an income statement for each cost method. 1. Baker Company has the following items related to cash on its trial balance on December 31 of the current year: Cash in Drawer Checking Prime Bank $ 1.500,00 Checking-Harvest Bank 26,675.00 (1.975.25) Checking National Bank 50,950.00 Treasury Bills Maturity Date, March 1 15,000.00 Treasury Bills Maturity Date. July 1. next year 20,000.00 Sinking Fund for Bond Redemption in 5 years 125.050.00 *S15,000.00 represents a compensating balance for a $200,000 loan due in three years. This amount cannot be withdrawn. Please prepare the appropriate financial statement disclosures for the above amounts on Baker's balance sheet. Assume that Baker uses Generally Accepted Accounting Principles for reporting cash. 2. McCabe Industries is preparing to estimate its allowance for uncollectible accounts at December 31 of the current year. Its current balance in Accounts Receivable is $270,000, and the Allowance for Doubtful Accounts is $10,000. Revenues for the current year were $1,250,000. All sales were on credit. Consider cach assumption separately. 1. Assume that McCabe uses the income statement (Percentage of net credit sales) approach and estimates that 4% of sales are uncollectible. Prepare the journal entry to record bad debt expense. 2. Assume that McCabe uses the balance sheet approach and assumes that 6% of accounts receivable are uncollectible. Prepare the journal entry to record bad debt expense 3. Assume that McCabe uses the balance sheet approach and ages its accounts receivable according to the schedule below: Age of Receivables Days) Amount Uncollectible Current (less than 30) $170,000 31-60 60,000 61-90 23,000 91-120 14,000 20 Over 120 3,000 Total $270,000 Complete the aging schedule and prepare the journal entry to record bad debt expense. 3. Ditfurth Corporation is needs an infusion of cash in order to purchase additional inventory. Thus, the corporation has decided to pledge $500,000 of receivables to the Last National Bank of Cimarron. The terms of the borrowing are as follows: The Corporation will receive $450,000 less a fee of 5% of total pledged receivables. The loan will have an annual interest rate of 10%. 1. Assume that the pledging transaction occurred on June 1. Record the journal entry for receipt of the loan proceeds. 2. Dittfurth received $400,000 during the month of June and remitted it to the bank along with the loan interest. Record the journal entries for these transactions. 4. Novice Industries has decided to factor $150,000 of accounts receivable to Able Financing Company. Able will remit 90% of the receivables to Novice immediately. It charges Novice a factoring fee of 3% that it will collect at the time it remits the remainder of the receivables. This holdback has an estimated fair value of $10,000. 1. Assume that this factoring arrangement is without recourse. Prepare the journal entry to record the transaction. 2. Assume that this factoring arrangement is with recourse with a $5,000 recourse liability. Prepare the journal entry to record the transaction. 3. The Wysocki Company has undertaken a physical count of inventory on hand on December 31, 2018. The cost of inventory on hand is $445,993. Additional information follows: 1. Wysocki Company received goods costing $32,000 on January 2, 2016. The goods were shipped f.o.b, shipping point, and left the seller's business on December 30, 2018. 2. Wysocki Company received goods costing $40,000 on January 3, 2016. The goods were shipped f.o.b. destination and left the seller's business on December 30, 2018. 3. Wysocki Company sold goods costing $20,000 on December 29, 2018. The goods were picked up by the common carrier on December 29 and shipped f.o.b. destination. The goods arrived on January 2, 2016. The retail price of goods was $30,000. 4. Wysocki Company sold goods costing $30,000 on December 31, 2018. The goods were picked up by the common carrier on December 31 and shipped f.o.b. shipping point. The goods were not included in Wysocki's physical count at December 31, 2018. The goods arrived on January 4, 2019. The retail price of the goods was $60,000. Wysocki paid the shipping costs of $433 on December 31. 5. Wysocki Company was the consignee for some goods from Walmart. The goods cost Walmart $100,000 and the retail price of $300,000. These goods were included in Wysocki's physical count on December 31, 2018 at the retail price. 6. Wysocki Company had some goods on consignment at Walmart. The goods cost $50,000 and had a retail price of $100,000. These goods were not included in Wysocki's physical count at December 31, 2018 because the goods were not on the company's premises. Required: 1. For each item listed above, indicate the amount and sign of the adjustment to the inventory balance at December 31, 2018. If no adjustment is required, for an item, enter 0. 2. Determine the correct amount of inventory for Wysocki Company at December 31, 2018. 6. Novelli's Nursery has developed the following data for lower of cost and net realizable valuation for products: Cosi $1,700 1.600 Selling Price Broad leaf trees: Ash $1,800 Beech 2,200 Needle leaf trees: Cedar $2,500 Fir 3,600 Fruit trees! Apple $ 1,800 Cherry 2,300 The costs to sell are 10% of selling price. $1,750 3,350 $1,400 1,800 Required: 1. Determine the reported inventory value assuming the lower of cost and net realizable value rule is applied to classes of trees. 2. Determine the reported inventory value assuming the lower of cost and net realizable value rule is applied to the entire inventory. 3. Determine the reported inventory value assuming the lower of cost and net realizable value rule is applied to individual trees. 7. A fire destroyed the inventory of Barber Company. The following information is available: Beginning inventory $50,000 Purchases $170,000 Net Sales Revenue $200,000 Gross Profit Percentage 30% Required: 1. Prepare a schedule to compute the amount of inventory lost in the fire using the gross profit method. 2. Prepare the required journal entry after the fire. 3. Assume that the goods are marked up 25% above cost. Compute the amount of inventory lost in the fire. 8. The following information is available for the month of June for a retail store: Sales $79,000 Sales Returns $1,000 Markups $10,000 Markup cancellations $1,000 Markdowns $9,300 Purchases (at cost) $40.000 Purchases (at retail) $107.000 Purchase returns (at cost) $1,200 Purchase returns (at retail) $2,000 Beginning inventory (at cost) $30,000 Beginning inventory (at retail) $46,000 Required: Calculate the ending inventory at cost using the basic retail method. Round ratios to four decimal places. (For example, 0.40127 -0.4013) 9. A department store wants to estimate the cost of ending inventory using the conventional retail method. Round ratios to four decimal places. For example, 0.43677 equals 0.4368. The following data is available: Sales Sales Returns Markups Markdowns Purchases (at cost) Purchases (at retail) Purchase returns (at cost) Purchase returns (at retail) Beginning inventory (at cost) Beginning inventory (at retail) $90,000 $1,000 $10,000 $9,000 $20,000 $50,000 $1,200 $2,000 $30,000 $46,000 Required: Using the conventional retail method, estimate the cost of ending inventory. 10. Infomania Corporation uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for the year 2018 is as follows: Cost Retail Beginning inventory $140,000 $280,000 Purchases 420,000 690,000 Freight in 16,000 Purchase returns 12,000 18,000 Net markups 24,000 Net markdowns 36,000 Normal spoilage 5,000 Sales 700,000 Sales returns 20,000 Employee discounts 6,000 The company records sales net of employee discounts. Required: Estimate Infomania's ending inventory and cost of goods sold for the year using the retail inventory method and the following applications: 1. Average cost. 2. Conventional. 11. The Petrowski Company uses the perpetual inventory system. The Petrowski Company has the following data available for the month of January: Unit Cost $100 $120 Date Jan. 1 Jan. 9 Jan. 10 Jan. 15 Jan. 18 Jan. 24 Jan. 30 Transaction Beginning inventory Purchase Sale Purchase Sale Purchase Sale Units 100 300 200 400 300 $140 100 $160 10 1. Determine the Cost of Goods Sold for January using the following methods: a. FIFO b. LIFO c. Moving-average (Round per unit costs and all other dollar amounts to two decimal places.) Assume that the unit sales price for the goods is $500. Further. assume that sales commissions are $10 per unit and general expenses are $10,000. Prepare an income statement for each cost method