EF 212 - INTRODUCTION TO ACCOUNTING T.C. PR RES UNIVERSITY Faculty of Economics and Administrative Sciences Fall Semester of 2020-2021 Academic Year Quiz Date : 6/01/2021 Instructor : S. Perek Grading : Q1: 33 points Q2: 33 points Q3: 34 points Duration : 60 minutes Instructions : Solve the questions on blank sheets. Take the picture of each page after SIGNING EACH PAGE and showing your UNIVERSITY ID as part of the picture. Convert the pictures into PDF and upload it to OIS. Documents not uploaded to OS will not be accepted. QUESTION 1: On January 31, Locust Imaginations had a $85,000 debit balance in Accounts Receivable and a $3,700 credit balance in Allowance for Bad Debts. During February, Locust Imaginations made Sales on account, $375,000 Collections on account, $410,000 Write-offs of uncollectible receivables, $8,000 Required: Open T-Accounts for Accounts Receivable and Allowance for Bad Debts, show the effects of ALL OF THE INFORMATION ABOVE on these accounts. Calculate and record bad debts expense using the allowance method. Bad debts expense was estimated at 2% of credit sales. Show the ending balances of each accounts after making the adjusting entry for bad debts expense. QUESTION 2: The accounting records of Clean Air Solutions, Ltd. show the following data. Beginning inventory 3,000 units at $5 Purchases 8,000 units at $7 Sales 9,400 units Required: Determine cost of goods sold and the ending inventory balance for the period under a perpetual inventory system using: (a) the FIFO method (b) the average-cost method. (Round unit cost to nearest tenth of a cent.) (c) Which method provides more gross profit and why? QUESTION 3: _Xanadu Co. purchased a new machine on January 1, 2019, at a cost of $96,000. The company estimated that the machine will have a residual value of $12,000. The machine has a useful life of 5 years. Required: (a) Compute the depreciation expense under the double declining balance method for the year 2019. (b) Assume that the machine is sold after the first year for $60,000. Record the sale of machine