Part of the accounting records for the last quarter of 2014 of Pix Corp., a Canadian private company applying IFRS, were destroyed due to a software malfunction. You have been tasked with reconstructing the accounting records related to inventory and receivables.

The following information has been salvaged:

Extract from the Quarterly Statement of Financial Position as at December 31, 2014

Oct. 1, 2014 Dec. 31, 2014

Current assets

Net accounts receivable $4,700 ?

Inventory 300 ?

Aging of receivables analysis as at December 31, 2014 (incomplete)

Days outstanding	Amount	Estimated percentage of uncollectible	Estimated uncollectible amount	Observations
0-60		3%
60-90		10%
>90	$2,000	50%		$500 of the $2,000 were deemed completely uncollectible

By talking to the CEO, the controller, and other employees of the accounting department you were also able to gather the following information:

Firms accounting policies:

The company uses the periodic inventory system and the FIFO cost flow method.

The company uses the gross method to account for sales discounts.

The company applies the percentage-of-receivables method for estimating AFDA, using the aging of receivables analysis to adjust the AFDA at year-end.

The only inventory and sales-related transactions during the quarter were:

1. On October 15, 2014, Pix sold 80 units at $10 each, shipped on the same day, FOB destination, and arrived 3 days later, freight-out of $30 for the entire shipment, and payment within 30 days. As at December 31st, 2014, the client had still not paid.

2. On November 10, Pix Corp. received from its Estonian business partner a shipment of 1,000 units costing $5 each. Pix also had to cover shipping costs of $500, import duty taxes of $100, personnel costs for unloading the truck of $200, bonuses for selling agents of $300, English-Estonian translation services that the CEO used to conclude this deal of $100.

3. On December 1, Pix sold 500 units at $10 each, 2/10, n/30. The client paid half of the total amount on December 5, but made no other payment since.

4. On December 15, 2014, Pix signed a contract for the purchase of 500 units of inventory from a Canadian supplier at a price of $6.50 per unit. The supplier shipped the goods FOB destination on December 27. On December 31, 2014, the goods had not yet been delivered, and no invoice had been received.

Other information:

The physical count of inventory at the end of the previous quarter was 100 units. The physical count of inventory at the end of December 2014 was 520 units.

The Allowance for decline of Inventory to Net Realisable Value at the end of the previous quarter was $200.

The beginning balance for Gross Accounts Receivable for the quarter was $5,000.

The CEO estimates that, due to obsolescence, inventory on hand at the end of 2014 could be sold for a per unit price of $5.50, with $0.10 per unit costs to sell.

Required:

Re-construct the journal entries for the transactions during the quarter.

Make the necessary quarter-end adjusting entries as at December 31, 2014. Show your computations.

Present to the CEO the calculation of gross profit.