Part 1 - Merchandise Transactions

Maeve's Store had the following transactions during December, the last month of the accounting period:

Dec 1 Sold merchandise on credit for $7,000, cost $3,000, terms 1/10, n/30.

Dec 3 Purchased merchandise for cash, $1,900.

Dec 4 Purchased merchandise on credit for $5,600, terms 2/10, n/30.

Dec 5 Issued a credit memorandum for $600 to a customer who returned merchandise purchased November 29, cost $400.

Dec 11 Received payment for merchandise sold December 1.

Dec 15 Received a credit memorandum for $600 for the return of faulty merchandise purchased on December 4.

Dec 18 Paid freight charges of $50 for merchandise ordered last month.

Dec 23 Paid for the merchandise purchased December 4 less merchandise returned.

Required:

Prepare general journal entries to record these transactions, using a perpetual inventory system.

Acct 122 - Introductory Financial Accounting

Final Exam - Fall 2020

Part 2 - Inventory Valuation: FIFO Method

During January, a company that uses a perpetual inventory system had beginning inventory, purchases, and sales as follows:

Units

Cost per unit

Begin Inventory

100

$12

Jan 5

Sale

50

10

Purchase

70

$16

15

Sale

25

25

Sale

35

Prepare schedule to show the cost of goods sold and ending inventory using the FIFO cost flow assumption.

Part 3 - Bad Debts

Triple Mint Gum Co. uses the allowance method of accounting for bad debts. Their Allowance for Doubtful Accounts account has a year-end debit balance, prior to adjustment, of $500. The bad debts are estimated at 5% of $200,000, the year-end accounts receivable. Prepare the year end adjusting journal entry for bad debt expense.

Acct 122 - Introductory Financial Accounting

Final Exam - Fall 2020

PART 1: Merchandising Journal Entries

Acct 122 - Introductory Financial Accounting

Final Exam - Fall 2020

PART 2: FIFO Method

PART 3: Bad Debts Expense