ACCT 201 Case Fall 2021 REQUIRED: Page 3 Answer each of the following questions. Be sure to show your calculations where indicated. Question 1: On March 15, JLR Equipment purchased $100,000 of merchandise to resell terms 2/10,n/30, from Audio Specialists, Inc. Assume that JLR Equipment uses the perpetual inventory system. On March 20, $10,000 of inventory is returned. On March 23, JLR makes payment to Audio Specialists, Inc. Record the entries on March 15, March 20 and March 23 on the books of JLR Equipment Date Account Debit Credit Question 2: Assume the same information as above in Question 1 and record the entries on March 15. March 20 and March 23 on the books of Audio Specialists, Inc. The inventory sold on March 15 cost $75,000 and the cost of inventory returned on March 20 is $7.500. Account Debit Date Credit ACCT 201 Case Fall 2021 Page 4 Question 3: Orchid Company reports the following information regarding merchandise inventory for August. Assume Gray uses the periodic system and that 350 units of merchandise were on hand on August 31, Date August 1 August 10 August 16 August 24 Explanation Inventory Purchase Purchase Purchase Units 100 300 400 200 Unit Cost $50 60 70 80 Total Cost $ 5,000 18,000 28,000 16,000 a c What is the cost of goods available for sale for August? b How many units of inventory were available for sale during August? What is the cost of ending inventory under FIFO? d How much is cost of goods sold under FIFO? e What is ending inventory under the average cost method? Show your calculations in the space below. ACCT 201 Case Fall 2021 Page 5 Question 4: Prepare the bank reconciliation at December 31, 2021, for Jump House Company using the information listed below. Be sure to include descriptions along with corresponding amounts in your bank reconciliation below 1 Cash balance per bank, December 31, $18,953 2. Cash balance per books, December 31, $15,954 3. Outstanding checks at December 31, $3,588 4 An EFT deposit was received from a customer for $2.945 5. Received an NSF check from Supply Depot (a customer) in December for $855 6. Deposits in transit at December 31, $1,654 7. The bank charged a fee for the month of December, $25 8 Check number 3944 was paid in the amount of $3,000 but was incorrectly recorded by Jump House for $2.000, Jump House Company Bank Reconciliation December 31, 2021 Balonce per Bank Balance per Books Additions Additions Deductions: Deductions: Adjusted Cash Balance Adjusted Cash Balance Page 6 ACCT 201 Case Fall 2021 Question 5: On November 30, Hopkins Agency has accounts receivable of $200,000 and a credit balance of $4,000 in Allowance for Doubtful Accounts a What is the cash (net) realizable value on November 307 b. On December 31, the accounts receivable balance is $400,000 and Allowance for Doubtful Accounts is $5,000. Hopkins uses the percentage of receivables method to determine uncollectible receivables. Management estimates that 3% of receivables will not be collected. For what amount would the adjustment be to record the estimate of uncollectible accounts? c. What would the balance in Allowance for Doubtful Accounts be after the above adjustment on December 312 d. What account would be debited to record the adjustment in part (b) above? c. During January of the follow year, a customer's $3,000 account is written off. What account would be debited to record this transaction? f. What is cash (net) realizable value on January 31, 2021, after the write off? f. On what financial statement will each of the following be reported (1) Bad Debt Expense (2) Allowance for Doubtful Accounts (3) Accounts Receivable ACCT 201 Case Fall 2021 Page 8 PDK Supply, Inc. Adjusted Trial Balance 12/31/2021 Debits Credits $ 63,200 42,000 2,500 19,700 6,000 3,500 260,000 134,000 Cash A/R Allowance for Doubtful Accounts Inventory Supplies Prepaid Insurance Land Equipment Accumulated Depreciation - Equip N/P due 3/31/22 A/P Unearned Revenue Salaries & Wages Payable N/P due 12/31/25 Common Stock Retained Earnings Dividends Sales Sales Discounts COGS Salaries & Wages Expense Advertising Expense Utilities Expense Depreciation Expense Supplies Expense Freight Out Interest Expense Interest Revenue Gain on Sale of Equipment Loss on Sale of Equipment 24,000 3,000 29,000 16,000 1.900 59,000 75,000 281,350 8,000 162,000 6,500 39,000 18,500 14,300 11,000 13,000 8,500 5,400 1,200 250 1,800 2,000