A.
B.
C.
D.
E.
F.
Complete assignments using some type of computer software program, e.g., Microsoft Word, Excel.
You will NOT receive ANY CREDIT FOR LATE HOMEWORK.
When completing your homework assignments DO NOT use abbreviations.
As discussed during class, you can work on these homework assignments in groups or as an individual.
For ANY problem involving a calculation, CLEARLY SHOW HOW you performed the calculation.
For ANY problem involving an entry, CLEARLY identify EACH account that you debited and EACH account that you
credited as either a(an):
1) Asset (includes contra-assets)
You can abbreviate with an A
2) Liability (includes contra-liabilities)
You can abbreviate with an L
3) Equity (includes contra-equities)
You can abbreviate with an EQ
4) Revenue (includes contra-revenues AND gains)
You can abbreviate with an R
5) Expense (includes losses)
You can abbreviate with an EX
For example, if you make the following entry:
Cash
$100
Place an “A” to the left of “Cash”
Sales revenue
$100
Place an “R” to the left of “Sales Revenue”
Thus, your final answer would look like this:
A
Cash
$100
R
Sales revenue
$100
UNACCEPTABLE ENTRY FORMATS. Format your entries like the example above. DO NOT give me entries that look like
the following:
A
Cash
$100
R
Sales revenue
$100
or
A
Cash
$100
R
Sales revenue
$100
or
A
Cash
$100
R
Sales revenue
$100
or
A
Cash
$100
R
Sales revenue $100
22. (3 points) Lucy factored $500,000 of accounts receivable with Ethel on a without recourse basis on May 1. Ethel assessed a
finance charge of 2.5% of the total ARs factored. Ethel retained an amount equal to 3% of the total ARs factored to cover sales
returns. During May and June, customers returned merchandise to Lucy on $13,000 of credit sales. All of these returns related to
receivables from the $500,000 pool of ARs sold. After taking the returns into consideration, Ethel collected $482,000 of the
factored ARs. On June 30, Lucy and Ethel “settled up” meaning Lucy and Ethel paid each other any cash that was due the other.
(a) Prepare the entry Lucy should make on May 1.
(b) Prepare the entry Lucy should make on June 30.
23. (5 points) Lucy factored $1,000,000 of accounts receivable with Ethel on a with recourse basis on May 1. (Assume the
transaction meets the criteria to be classified as a sale.) Ethel assessed a finance charge of $22,500. Ethel retained $50,000 of the
total ARs factored to cover sales returns. Lucy estimated her recourse liability to be $40,000. During May and June, customers
returned merchandise to Lucy on $44,000 of credit sales. All of the returns related to receivables from the $1,000,000 pool of
ARs sold. After taking the returns into consideration, Ethel collected $925,000 of the factored receivables. On June 30, Lucy and
Ethel “settled up” meaning Lucy and Ethel paid each other any cash that was due to the other.
(a) Prepare the entry Lucy should make on May 1.
(b) Prepare the entry Lucy should make on June 30.
24. (4 points) On December 31, 2014, J sold some inventory to T. T was short of cash and J agreed to accept a $250,000, zerointerest bearing note receivable. J will collect the note principle in full on December 31, 2017. Under normal circumstances, J
earns 3% on its funds. The cost of the inventory sold was $90,000. Prepare the entries J should make on 12-31-14, 12-31-15, 1231-16, and 12-31-17.
25. (4 points) On December 31, 2012, M sold some inventory to T in exchange for a $750,000, 4% note receivable. M will collect
the note principal in full on December 31, 2014. Interest will be collected every December 31 starting December 31, 2013. The
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market rate of interest at the time of the sale was 2%. The cost of the inventory sold was $260,000. Prepare the entries M should
make on 12-31-12, 12-31-13, and 12-31-14.
26.
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(15 points) The following pertain to the cost of H’s only inventory item:
Inventory on hand, January 1
0 units
Purchases, January 2
70 units @ $15 per unit
Purchases, January 8
55 units @ $16 per unit
Purchases, January 12
95 units @ $17 per unit
Purchases, January 16
32 units @ $17 per unit
Purchases, January 20
48 units @ $18 per unit
Purchases, January 23
50 units @ $19 per unit
Purchases, January 26
15 units @ $20 per unit
365
Sales, January 5
35 units @ $30 per unit
Sales, January 11
40 units @ $30 per unit
Sales, January 13
42 units @ $30 per unit
Sales, January 17
50 units @ $30 per unit
Sales, January 22
50 units @ $30 per unit
Sales, January 25
10 units @ $30 per unit
Sales, January 27
25 units @ $30 per unit
252
(252 x $30 = $7,560)
Calculate COGS AND GP for January AND EI as of 01-31 under the following assumptions:
➢ H uses perpetual LIFO
EI:
COGS:
Gross profit:
➢ H uses periodic LIFO
EI:
COGS:
Gross profit:
➢ H uses periodic FIFO
EI:
COGS:
Gross profit:
➢ H uses a weighted average method and rounds the unit cost to the nearest penny.
EI:
COGS:
Gross profit:
➢ H uses a moving-average method and rounds the unit cost to the nearest penny.
EI:
COGS:
Gross profit:
27.
•
•
•
•
•
•
•
(6 points) The following pertain to the cost of H’s only inventory item:
Inventory on hand, January 1
200 units @ $37 per unit
Purchases, January 8
900 units @ $88 per unit
Purchases, January 12
750 units @ $90 per unit
Purchases, January 20
300 units @ $91 per unit
Purchases, January 26
600 units @ $95 per unit
2,750
Sales, January 5
50 units @ $200 per unit
Sales, January 11
800 units @ $200 per unit
2
•
•
•
•
Sales, January 13
Sales, January 17
Sales, January 22
Sales, January 30
600 units @ $200 per unit
100 units @ $200 per unit
250 units @ $200 per unit
625 units @ $200 per unit
2,425
(2,425 x $200 = $485,000)
Calculate COGS AND GP for January AND EI as of 01-31 under the following assumptions:
➢ H uses perpetual LIFO
EI:
COGS:
Gross profit:
➢ H uses periodic LIFO
EI:
COGS:
Gross profit:
28. (9 points) Irene uses a calendar-year accounting period and a periodic inventory system. Assume Irene had the following
independent situations:
•
Situation 1. Goods shipped to Irene by a vendor f.o.b. shipping point on 12-28-11 were in transit at 12-31-11. The goods cost
$5,000. On 12-29-11, Irene recorded a credit purchase of $5,000.
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Situation 2. Goods shipped to Irene by a vendor f.o.b. destination point on 12-28-11 were in transit at 12-31-11. The goods
cost $7,000. On 01-04-12, the day the goods arrived, Irene recorded a credit purchase of $7,000.
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Situation 3. Goods shipped to Irene by a vendor f.o.b. shipping point on 12-29-11 were in transit at 12-31-11. The goods cost
$9,000. On 01-03-12, the day the goods arrived, Irene recorded a credit purchase of $9,000.
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Situation 4. Goods shipped to Irene by a vendor f.o.b. destination point on 12-24-11 were in transit at 12-31-11. The goods
cost $4,000. On 12-26-11, Irene recorded a credit purchase of $4,000.
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Situation 5. Goods shipped by Irene to a customer f.o.b. destination on 12-30-11 were in transit at 12-31-11. The goods cost
$8,000. On 12-30-11, Irene billed the customer and recorded a credit sale of $20,000.
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Situation 6. Goods shipped by Irene to a customer f.o.b. shipping point on 12-29-11 were in transit at 12-31-11. The goods
cost $20,000. On 12-29-11, Irene billed the customer and recorded a credit sale of $45,000. The customer received the goods on
01-04-12.
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Situation 7. Goods shipped by Irene to a customer f.o.b. shipping point on 12-29-11 were in transit at 12-31-11. The goods
cost $12,000. On 01-15-12, Irene billed the customer and recorded a credit sale of $22,000. The customer received the goods on
01-15-12.
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Situation 8. On 12-31-11, Irene was in possession of $25,000 of goods that she was holding on a consignment basis. Irene
received these goods on 12-29-11. Upon receipt of these goods, Irene did not record any type of journal entry.
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Situation 9. On 12-31-11, Irene had $6,000 of goods out on consignment with the Pederson Company. Irene shipped these
goods to Pederson on 12-29-11. Upon shipment of these goods to Pederson, Irene recorded a $15,000 credit sale.
Assume Irene values the inventory reported on its balance sheet and the amount recorded as cost of goods sold on its income
statement on the basis of its physical inventory count that Irene performed on 12-31-11. Irene counts whatever is on its premises.
Individually discuss the effect (in dollars and direction, e.g., overstate, understate, no effect) that each of the above items has on:
➢ Irene’s sales revenue for the year ended 12-31-11
➢ Irene’s cost of goods sold for the year ended 12-31-11
➢ Irene’s accounts receivable as of 12-31-11
➢ Irene’s inventory as of 12-31-11
➢ Irene’s accounts payable as of 12-31-11
➢ Irene’s stockholders’ equity as of 12-31-11
Situation
#
1
2
3
4
5
6
I’s sales for year
ended 12-31-11
I’s COGS for
year ended
12-31-11
I’s AR as of
12-31-11
3
I’s inventory as
of 12-31-11
I’s AP as of
12-31-11
I’s SE as of
12-31-11
7
8
9
Remember, each box above should have BOTH an effect AND a $ amount.
29. (6 points) Diane makes one product. Diana adopted the dollar-value LIFO inventory method on 12-31-12. Her ending inventory
at 12-31-12 was $26,000. Additional inventory data follows:
Inventory at
Price index
Cost of goods manufactured
Year
year-end prices
(base year 2012)
during the year
2013
$28,420
1.015
$150,000
2014
$28,764
1.020
$160,000
2015
$28,773
1.035
$165,000
2016
$29,120
1.040
$170,000
2017
$29,925
1.050
$175,000
2018
$30,173
1.055
$185,000
Compute the inventory at December 31, 2013, 2014, 2015, 2016, 2017 and 2018 AND the cost of goods sold for each year assuming
Diane uses the dollar-value LIFO method for each year.
30. (3 points) Hartley’s accounting records included the following information:
Inventory, 01-01-13
$96,250
Purchases during 2013 (excluding shipping)
$1,450,180
Purchase returns during 2013
$57,500
Freight-in on 2013 purchases
$33,075
Sales during 2013
$2,467,500
Hartley completed a physical inventory on 12-31-13 and calculated an ending inventory of $106,000, at cost. In recent years,
Hartley's gross profit equaled 75% of Hartley’s cost. Hartley suspects some inventory may have been shoplifted. Prepare the entry, if
necessary, to reflect the estimated loss from any shoplifted items.
31. (3 points) Gage’s accounting records included the following information:
Inventory, 01-01-15
$51,000
Purchases during 2015
$705,000
Sales during 2015
$1,662,000
Sales returns during 2015
$66,480
Gage completed a physical inventory on 12-31-15 and calculated an ending inventory of $80,000, at retail selling price. In recent
years, Gage's gross profit equaled 55% of Gage’s selling price. Gage suspects some inventory may have been shoplifted. Prepare the
entry, if necessary, to reflect the estimated loss from any shoplifted items.
32. (2 points) As of 12-31-15, Zena Company has four different inventory items on hand. Data on the four items follows:
Item
Quantity on hand
Unit cost
Expected selling price
Estimated disposal
costs
C3Z22P3
450
$30.75
$40
$3
PQ27845
15
$ 9.50
$10
$2
ZT15577
235
$17.00
$29
$0
SF98888
45
$43.00
$50
$9
Using the lower-of-cost-or-net realizable value approach applied on an individual-item basis, determine if Zena needs to make an
entry to write her inventory down. If so, prepare the entry Zena should make
33. (2 points) As of 12-31-15, Acme Company has three different inventory items on hand. Data on the three items follows:
Item
Quantity
Unit cost
Replacement
Normal
Expected
Estimated
on hand
(Acme uses LIFO)
cost
profit
selling price
disposal costs
A
57
$450
$625
$800
$1,500
$100
B
42
$200
$300
$230
$400
$25
C
15
$780
$800
$300
$1,000
$250
Using the lower-of-cost-or-market approach applied on an individual-item basis, determine if Acme needs to make an entry to write
her inventory down. If so, prepare the entry Acme should make
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