ACCT 201 Case SUMMER 2022 Page 3 REQUIRED: Answer each of the following questions. Be sure to show your calculations where indicated. Question 1: Answer each of the following. A. Olivia Gabriel owns Gabriel Construction Company. On March 16, the business received $4,000 from services completed that day and $2,800 for a job to be performed in April. 1. How much revenue should Gabriel Construction Company record on March 16? 2. What Generally Accepted Accounting Principle is being followed by Gabriel Construction Company in recognizing revenue? B. In June, Olivia Gabriel ventures into a new industry and opens a restaurant called Gabriel Eating. Olivia must prepare separate financial statements for Gabriel Construction Company as well as Gabriel Eating. This statement describes which Generally Accepted Accounting Principle? C. Gabriel Eating purchased the land on which its building is located during 2020 for $55,000. On December 31, 2022, the land has an appraised value of $61,000. 1. By what amount should the Land account be increased in 2022? 2. What Generally Accepted Accounting Principle is being followed by Gabriel Eating regarding the reporting of the Land? Question 2: On May 3, EF Media purchased $55,000 of merchandise to resell, terms 2/15, n/30, from JP Analytics Company. Assume that EF Media uses the perpetual inventory system. a What account is debited on May 3 when the merchandise is purchased? c b On May 10, EF Media returned $5,000 of the merchandise purchased. (1) What account is debited on May 10 for the return? (2) How much does EF Media owe JP Analytics Company AFTER the return (what's the balance in the account payable to Analytics Company?) EF Media pays the balance due on May 16: how much is paid to JP Analytics Company? ACCT 201 Case SUMMER 2022 Page 4 Question 3: Gray Company reports the following information regarding merchandise inventory for May. Assume Gray uses the periodic system and that 250 units of merchandise were on hand on May 31. Date Explanation Units Unit Cost Total Cost May 1 Inventory 100 $50 $ 5,000 May 10 Purchase 300 60 18,000 May 16 Purchase 400 70 28,000 May 24 Purchase 200 80 16,000 a b C What is the cost of goods available for sale for May? How many units of inventory were available for sale during May? What is the cost of ending inventory under FIFO? d How much is cost of goods sold under LIFO? e How much is cost of goods sold under Average Cost Method? Show your calculations in the space below. ACCT 201 Case SUMMER 2022 Page 5 Question 4: Prepare the bank reconciliation at December 31, 2022, for Camping Pro 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, $10,952 2. Cash balance per books, December 31, $3,809 3. Outstanding checks at December 31, $8,022 4. A $2,300 note receivable was collected by the bank on December 31 plus $200 of interest, less a collection fee of $50. 5. Received an NSF check from Cohill Company (a customer) in December for $100 6. Deposits in transit at December 31, $1,409 7. The bank charged a fee for the month of December, $20 8 Check number 2806 was paid in the amount of $2,000 but was incorrectly recorded for $200. Balance per Bank Additions: Deductions: Camping Pro Company Bank Reconciliation December 31, 2022 Balance per Books Additions Deductions: Adjusted Cash Balance Adjusted Cash Balance ACCT 201 Case SUMMER 2022 Question 5: Page 6 On November 30, Hopkins Agency has accounts receivable of $190,000 and a credit balance of $2,000 in Allowance for Doubtful Accounts. a. What is the cash (net) realizable value on November 30? b. Hopkins uses the percentage of receivables method to determine uncollectible receivables. On December 31, the accounts receivable balance is $300,000 and Allowance for Doubtful Accounts has a $4,000 credit balance. Management estimates that 2% 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 31? d. What account would be debited to record the adjustment in part (b) above? e. 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. On what financial statement will each of the following be reported: (1) Bad Debt Expense (2) Allowance for Doubtful Accounts (3) Accounts Receivable