QUESTION 3: Selected accounts have the following balances Debit Credit Accounts Receivable $100,000 Allowance for Doubtful Accounts $ 2,500 Sales 750,000 Sales Returns & Allowances 40,000

REQUIRED:

1. Prepare the journal entries for estimating bad debts assuming that the following separate assumptions are used (1) 6% of accounts receivable (2) 1% of net sales.

2. Assume instead that the allowance has a debit balance instead of a credit balance of $2,500. Prepare the necessary entries to record bad debts under each of the assumptions in 1. above. ____________________________________________________________________________________________________

QUESTION 4: ABC values their inventory under the lower of cost or market by individual product. The normal profit percentage is 40% of the selling price. The selling price also includes a 15% sales commission. Determine their total ending inventory. PRODUCT #1 #2 #3 Quantity 1,000 600 200 Unit Information: Cost: $10 $3 $7 Replacement Cost: $12 $2 $4 Selling Price: $16 $8 $6 ____________________________________________________________________________________________________

QUESTION 5: Determine the inventory that approximates average cost, lower of cost or market based on the following: Cost Retail Merchandise Inventory $ 190,000 $ 280,000 Purchases 600,000 840,000 Freight In 8,000 Net Markups 20,000 Net Markdowns 4,000 Net Sales 800,000