Hi! You just answered a question for me from Alpenrose Corporation. Could you answer a couple more? Problem 4

I need to prepare the journal entries to record the purchase of March 8 and the sale of March 14 under both periodic and perpetual inventory system (when using perpetual system, prepare the journal entries under both FIFO and LIFO.

Also the Inventory balance under the periodic inventory system with FIFO, LIFO and Average Cost.

MGMT 340 Comprehensive Review Problems #2 NAME___________ total pts: 15 Due: Nov. 7 Problem 1: The Gadzooks Chip Company offers credit terms to its customers. At the end of 2013, accounts receivable totaled $2,223,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $68,000 at the beginning of 2013 and $46,200 in receivables was written off during the year as uncollectible. No previously written off receivables were collected. The company estimates bad debts by applying a percentage of 3% to accounts receivable at the end of the year. 1. Prepare journal entries to record the write-off of receivables. 2. Prepare journal entries to record the year-end adjusting entry for bad debt expense. Show your computation. 3. How would accounts receivable be shown in the 2013 year-end balance sheet? 4. The company made $3,500,000 net credit sales during the year. If the company had used income statement approach to charge 1% of net credit sales to bad debt expense, how would it be recorded in journal entry? Would it have increased or decreased the amount set aside as allowance for uncollectible accounts? 1 A. B. Problem 2: The Fullbright Book Company transferred $200,000 of accounts receivable to the American Trust Bank. The transfer was made without recourse. American Trust remits 90% of the factored amount and retains 10% (Fullbright estimates the fair value of that 10% to be $15,000). When the bank collects the receivables, it will remit to Fullbright the retained amount less a 1% fee (1% of the total factored amount). Prepare the journal entry to record the transfer on the books of Fullbright assuming that the sale criteria are met. The Fullbright Book Company transferred $200,000 of accounts receivable to the American Trust Bank. The transfer was made with recourse. American Trust remits 90% of the factored amount and retains 10% (Fullbright estimates the fair value of that 10% to be $12,000). When the bank collects the receivables, it will remit to Fullbright the retained amount less a 1% fee (1% of the total factored amount). Fullbright anticipates a $4,000 recourse obligation. Prepare the journal entry to record the transfer on the books of Fullbright assuming that the "sale" criteria are met. C. On March 1, 2016, the Fullbright Book Company assigns $200,000 of accounts receivable to the American Trust Bank as collateral for an $160,000 loan due in six months. Fullbright will continue to collect the receivables. American Trust assesses a finance charge of 2% of the accounts receivable at the initiation of the loan; interest on the loan is 8%, payable six months later. 1. Prepare the March 1, 2016 journal entry for Fullbright. 2. Prepare the journal entry for Fullbright when it pays back the loan with interest on Aug 31, 2016. 2 Problem 3: The December 31, 2016, year-end inventory balance of the Delphi Printing Company is $517,000. You have been asked to review the following transactions to determine if they have been correctly recorded. 1. Materials purchased from a supplier and shipped to Delphi f.o.b. destination on December 28, 2016, were received on January 2, 2017. The invoice cost of $50,000 is not included in the preliminary inventory balance. 2. At year-end, Delphi had $12,000 of merchandise on consignment from the Harvey Company. This merchandise is included in the preliminary inventory balance. 3. On December 29, merchandise costing $17,000 was shipped to a customer f.o.b. shipping point and arrived at the customer's location on January 3, 2017. The merchandise is not included in the preliminary inventory balance. 4. Materials purchased from a supplier and shipped to Delphi f.o.b. shipping point on December 28, 2016 were received on January 4, 2017. The invoice cost of $32,000 is not included in the preliminary inventory balance. Determine the correct inventory amount to be reported on Delphi's 2016 balance sheet. 3 Problem 4: The following transactions affected Alpenrose Corporation's merchandise inventory during the month of March, 2016: March 1 March 8 March 14 March 18 March 25 March 31 Inventory on hand 3,000 units; cost $8.00 each. Purchased 5,000 units for $8.40 each on account. Sold 4,000 units for $14.00 each on account. Purchased 6,000 units for $8.20 each on account. Sold 7,000 units for $14.00 each on account. Inventory on hand 3,000 units. Part 1. Prepare the journal entries to record the purchase of March 8 and the sale of March 14 under both periodic and perpetual inventory systems (when using the perpetual system, prepare the journal entries under both FIFO and LIFO). 4 Part 2. Assume Alpenrose uses perpetual inventory system. Determine the inventory balance Alpenrose would report on its March 31, 2016, balance sheet and the cost of goods sold it would report on its March, 2016, income statement using each of the following cost flow methods: 1. First-in, first-out (FIFO) 2. Last-in, first-out (LIFO) Part 3. Assume Alpenrose uses periodic inventory system. Determine the inventory balance Alpenrose would report on its March 31, 2016, balance sheet and the cost of goods sold it would report on its March, 2016, income statement using each of the following cost flow methods: 1. 2. 3. First-in, first-out (FIFO) Last-in, first-out (LIFO) Average cost 5 Problem 5: On January 1, 2013, the Delbridge Company adopted the dollar-value LIFO method for its one inventory pool. The pool's value on this date was $832,000. The later years' ending inventory valued at year-end costs and the appropriate cost indexes are shown in the following table. Calculate the inventory value at the end of 2013, 2014, 2015, and 2016 using the dollar-value LIFO method. 1/1/2013 Cost Index 1 Yr-End Cost 832,000 12/31/201 3 1.02 948,600 12/31/201 4 1.05 971,250 12/31/201 5 1.08 1,026,00 0 12/31/201 6 1.06 1,012,30 0 Dollar Value LIFO $832,000 6 Problem 6: On July 1, 2016, Jekel & Hyde Inc. purchased land and incurred other costs relative to the construction of a new warehouse. A summary of economic activities is listed below: Indicate the accounts that would be affected by the above transactions and the resulting balance in each account. Apply the interest on the construction loan to the cost of the building only. 7 Problem 7: Outshine Ltd. begins construction of an education center on April 1, 2015 which is completed on July 31, 2016. The expenditures are as follows: April 1, 2015 $300,000 July 31, 2015 180,000 December 1, 2015 90,000 Jan.31, 2016 70,000 June 30, 2016 140,000 total 780,000 Outshine issues a $500,000 bond payable with an interest rate of 5% to finance the project which is outstanding during the entire construction period. In addition, the following general-purpose debts are outstanding: 7% 10-year bond due 2018 $2,000,000 8% 20-year note due 2020 $3,000,000 Required: A What is the weighted average accumulated expenditure in 2015? B What is the weighted average interest rate on the two general debts? C What is the amount of interest to be capitalized in 2015? 8 D What is the weighted average accumulated expenditure in 2016? E What is the amount of interest to be capitalized in 2016? F What is the total cost of the education center? 9 Problem 8: Anderson starts the year with Accounts Receivable $51,000 (Dr.), and Allowance for Doubtful Accounts $4,000 (Cr.). During the year, Anderson made net credit sales $400,000, collected cash $385,000 from customers, and wroteoff $3,000 of accounts that were deemed uncollectible. a) At the end of year, what are the unadjusted trial balance for accounts receivable and Allowance for doubtful accounts? b) At the end of the year, the accountant decides that about 3% of outstanding accounts receivables are uncollectible. Prepare the adjusting journal entry. c) Alternatively, the accountant estimates that 1.5% of credit sales are uncollectible. Prepare partial balance sheet at the end of year to present accounts receivable. 10 Problem 9: UNM purchased a parcel of land at $112,000 three years ago. In 2016, UNM exchanged the land for a machine owned by CNM. CNM originally paid $300,000 for the machine, and accumulated depreciation was $209,000 at the time of the exchange. UNM also received $20,000 from CNM. The market value of the land was $110,000 at the time of the exchange. a) What is the amount of gain or loss UNM should report from this exchange? b) What is the amount of gain or loss CNM should report from this exchange? c) Prepare journal entries for UNM and CNM. 11