D Question 19 3 Generally speaking, which of the following is an ACCURATE statement? O Amore lenient credit policy results in an increase in the quality of receivables O Amore lenient credit policy results in a decrease in sales revenue Amore stringent credit policy results in a decrease in collectability of receivables A more stringent credit policy results in a decrease in bad debt expense A more stringent credit policy results in an increase to net sales as a proportion of gross sales D Question 20 9 pts Rubio Corp. reported the following information as of December 31, Year 5: Sales, $1,200,000 Accounts Receivable, $250,000 Sales Discounts, Returns, and Allowances, $100,000 Allowance for Uncollectible Accounts, $5,000 (DEBIT) Using the above information, answer the following questions: A) Rubio Corporation should report NET sales of what amount in Year 5? [Select] B) If the company estimated bad debt expense for Year 5 to be 2% of NET sales, Rubio Corporation would report bad debt expense for Year 5 of: [Select] C) If the company used the percent of receivables method and estimated that 5% of gross receivables to be uncollectible, Rubio Corporation would report bad debt expense for Year 5 of: [Select] Question 21 26 pts INVENTORY TRANSACTIONS (26 points): The following are selected transactions for Old School Enterprises during the month of August. For each transaction, explain the journal entry required from the perspective of Old School Enterprises. You do NOT need to worry about form. Just tell me what accounts are debited and credited and the amounts. For example, your response might be on January 1, debit Supplies 100 and credit Accounts Payable 100. Label each transaction by letter (i.e. "A", "B", et cetera). Note that some transactions will require referencing other transactions. A) August 3: Old School purchases $25,000 of merchandise for resale from Blue's Wholesalers. Terms are FOB Shipping Point, 2/10, n/30. Blue ships the same day. (4 points) B) August 9: The goods from Blue's Wholesalers arrive. Old School pays off the entire balance. (4 points) C) August 14: Old School sells $12,000 of inventory to Dean Pritchard, terms 3/15, n/60, FOB shipping point, and ships the same day. The sales price is $16,000. (4 points) D) August 17: Dean Pritchard returns $3,000 of defective merchandise (selling price of $4,000) to Old School. The merchandise can be put back in inventory and is valued at 75% of its original cost. (5 points) E) August 19: Dean Pritchard complains that some of the items received are the wrong color. Old School issues him a credit memorandum for $700, and he decides to keep those goods. (4 points) F) August 24: Dean Pritchard makes full payment on account. (5 points) Question 22 12 pts Sea Bass Company reported the following transactions during the month of September. Beginning inventory was 1,100 units, all at $40/unit. Sea Bass Company has a PERPETUAL inventory system. September 7: Sold 400 units for $100/unit September 16: Purchased 1,000 units at $50/unit September 26: Sold 1,500 units for $110/unit September 29: Purchased 500 units at $55/unit . Using the above information, answer the following questions. Label your answers. SHOW YOUR WORK FOR POTENTIAL OF EARNING PARTIAL CREDIT IN THE CASE OF AN INCORRECT ANSWER. A) Calculate COST OF GOODS SOLD using FIFO. (6 points) B) Calculate COST OF GOODS SOLD using WEIGHTED AVERAGE. (6 points)
