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Examine the financial statements and additional disclosures Jormsvik Corp. Annual Income Statement for the period Sales Revenue, net Cost of goods sold Gross profit Operating Expenses Bad Debt Expense Operating Income Interest expense Tax Expense Net Income 2019 $10,600,000 3,000,000 7,600,000 800,000 920,000 $5,880,000 44,000 $1,167,200 $4,668,800 2018 $9,700,000 2,450,000 7,250,000 750,000 530,000 $5,970,000 47,000 $1,184,600 $4,738,400 12/31/19 12/31/18 Jormsvik Corp. Annual Consolidated Statement of Financial Position Accounts Receivable, net of total allowances of $65.000 and $105,000 for 2019 and 2018, respectively Inventory, net $4,850,000 $3,150,000 ??? ??? Jormsvik Corp. Annual Direct Method Statement of Cash Flows for the period Cash collections from receivables 2019 11,300,000 2018 8.100.000 Footnote disclosures-allowance for doubtful accounts and sales returns (ledger balances of accounts): 12/31/19 12/31/18 Balance of allowance for doubtful accounts $??? $70,000 Balance of allowance for sales returns $25,000 $35,000 Sales discounts $248,500 $0 tful accounts Jormsvik uses the gross method for accounting for cash discounts. To simplify, assume no accounts were reinstated during 2019 that were previously written off. Also assume that the window on sales returns did not expire for any returns (i.e. there was no overestimate of sales returns). All sales revenue represents credit sales. 1. Consider the information above as well as the following disclosures taken from the ledger book of the company regarding its inventory. These ledgers represent all account activity during the month for these accounts. lavestor 8,500,000 8,500,000 56,750,000 56,750,000 45.000 $8,000 $53,000 Inventory allowance 3,000 $4,000 $7,000 Determine: (a) The amount of net purchases made by the company during 2019 (3 pts). (hint: think of a simple inventory equation) (b) The inventory values reported by the company on the balance sheet for 12/31/19 and 12/31/18 (4 pts), (c) Determine COGS under the non-LIFO cost method for 2019. (2 pts) 2. If $200,000 of the cash collected from receivable during 2019 was paid outside the discount window and $11,100,000 was paid within the discount window. Determine the % discount offered by the company. (hint: make a journal entry for sales collected in the discount window with the information that you have the percent will not be a round number) (3 points) If the company made gross credit sales of $11,105,000 and all sales revenue is derived from credit sales, determine (1) sales returns for the period and (2) the value of actual returns during the year. (4 points) (hint: for (1) consider the relationship between gross and net sales, for (2) consider a t-account to solve for the information) 4. Determine the dollar value of accounts receivable write-offs during the year (hint: there are two way to solve this: one way would involve an A/R t-account and everything that impacted it this period, but it's not the only way if you're clever!). (3 points) Examine the financial statements and additional disclosures Jormsvik Corp. Annual Income Statement for the period Sales Revenue, net Cost of goods sold Gross profit Operating Expenses Bad Debt Expense Operating Income Interest expense Tax Expense Net Income 2019 $10,600,000 3,000,000 7,600,000 800,000 920,000 $5,880,000 44,000 $1,167,200 $4,668,800 2018 $9,700,000 2,450,000 7,250,000 750,000 530,000 $5,970,000 47,000 $1,184,600 $4,738,400 12/31/19 12/31/18 Jormsvik Corp. Annual Consolidated Statement of Financial Position Accounts Receivable, net of total allowances of $65.000 and $105,000 for 2019 and 2018, respectively Inventory, net $4,850,000 $3,150,000 ??? ??? Jormsvik Corp. Annual Direct Method Statement of Cash Flows for the period Cash collections from receivables 2019 11,300,000 2018 8.100.000 Footnote disclosures-allowance for doubtful accounts and sales returns (ledger balances of accounts): 12/31/19 12/31/18 Balance of allowance for doubtful accounts $??? $70,000 Balance of allowance for sales returns $25,000 $35,000 Sales discounts $248,500 $0 tful accounts Jormsvik uses the gross method for accounting for cash discounts. To simplify, assume no accounts were reinstated during 2019 that were previously written off. Also assume that the window on sales returns did not expire for any returns (i.e. there was no overestimate of sales returns). All sales revenue represents credit sales. 1. Consider the information above as well as the following disclosures taken from the ledger book of the company regarding its inventory. These ledgers represent all account activity during the month for these accounts. lavestor 8,500,000 8,500,000 56,750,000 56,750,000 45.000 $8,000 $53,000 Inventory allowance 3,000 $4,000 $7,000 Determine: (a) The amount of net purchases made by the company during 2019 (3 pts). (hint: think of a simple inventory equation) (b) The inventory values reported by the company on the balance sheet for 12/31/19 and 12/31/18 (4 pts), (c) Determine COGS under the non-LIFO cost method for 2019. (2 pts) 2. If $200,000 of the cash collected from receivable during 2019 was paid outside the discount window and $11,100,000 was paid within the discount window. Determine the % discount offered by the company. (hint: make a journal entry for sales collected in the discount window with the information that you have the percent will not be a round number) (3 points) If the company made gross credit sales of $11,105,000 and all sales revenue is derived from credit sales, determine (1) sales returns for the period and (2) the value of actual returns during the year. (4 points) (hint: for (1) consider the relationship between gross and net sales, for (2) consider a t-account to solve for the information) 4. Determine the dollar value of accounts receivable write-offs during the year (hint: there are two way to solve this: one way would involve an A/R t-account and everything that impacted it this period, but it's not the only way if you're clever!). (3 points)