Question 5 (20 marks) COR Limited is a dealer of electronics in Hong Kong. The company purchases its inventories from various suppliers and sells the products in its retail stores. COR Limited showed the following on 31 December 2018 before adjustment. It estimated that 5% of its Accounts Receivable would be uncollectible. Accounts Receivable Allowance for Doubtful Accounts Debit $125,000 Credit $1,100 During July 2019, the following changes in a particular model of inventory took place: 1 July - An opening balance of 1,400 units purchased at $24 per unit 10 July - Purchased 600 units at $28.25 per unit 15 July - Sold 1,500 units at $50 per unit 24 July - Purchased 700 units at $30 per unit Required: a. Name the six ingredients of fundamental qualities in the conceptual framework. (3 marks) b. Name the four enhancing qualities in the conceptual framework. (2 marks) C. Prepare the journal entry to write down Accounts Receivable on 31 December 2018. (2 marks) d. Prepare the Accounts Receivable section of the statement of financial position as at 31 December 2018. Show the cash realisable value of the Accounts Receivable. (3 marks) Calculate the cost of goods sold and ending inventory for July 2019 if COR Limited adopts the following cost flow assumptions (round to the nearest cent). e. First-in, First out (FIFO) (3 marks) f. Weighted average (3 marks) g. Moving average (4 marks) [Total for Question 5: 20 marks] Question 5 (20 marks) COR Limited is a dealer of electronics in Hong Kong. The company purchases its inventories from various suppliers and sells the products in its retail stores. COR Limited showed the following on 31 December 2018 before adjustment. It estimated that 5% of its Accounts Receivable would be uncollectible. Accounts Receivable Allowance for Doubtful Accounts Debit $125,000 Credit $1,100 During July 2019, the following changes in a particular model of inventory took place: 1 July - An opening balance of 1,400 units purchased at $24 per unit 10 July - Purchased 600 units at $28.25 per unit 15 July - Sold 1,500 units at $50 per unit 24 July - Purchased 700 units at $30 per unit Required: a. Name the six ingredients of fundamental qualities in the conceptual framework. (3 marks) b. Name the four enhancing qualities in the conceptual framework. (2 marks) C. Prepare the journal entry to write down Accounts Receivable on 31 December 2018. (2 marks) d. Prepare the Accounts Receivable section of the statement of financial position as at 31 December 2018. Show the cash realisable value of the Accounts Receivable. (3 marks) Calculate the cost of goods sold and ending inventory for July 2019 if COR Limited adopts the following cost flow assumptions (round to the nearest cent). e. First-in, First out (FIFO) (3 marks) f. Weighted average (3 marks) g. Moving average (4 marks) [Total for Question 5: 20 marks]
