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    Midterms I Answer Key

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    aldric taclan
    1. For AA Merchandising, the adjusted balances for accounts receivable, inventories, and sales are 350,620, 520,440, and 1,494,120 respectively. 2. For BB Merchandising, using the FIFO cost flow assumption, the cost of goods sold is 2,988,400 and the ending inventory at cost is 1,027,850. 3. For ABC Corp, the balance of accounts receivable as of June is 391,000 and the balance of loans payable as of June is 166,200.

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    Midterms I Answer Key

    Uploaded by

    aldric taclan
    302 views5 pages
    1. For AA Merchandising, the adjusted balances for accounts receivable, inventories, and sales are 350,620, 520,440, and 1,494,120 respectively. 2. For BB Merchandising, using the FIFO cost flow assumption, the cost of goods sold is 2,988,400 and the ending inventory at cost is 1,027,850. 3. For ABC Corp, the balance of accounts receivable as of June is 391,000 and the balance of loans payable as of June is 166,200.

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    1. For AA Merchandising, the adjusted balances for accounts receivable, inventories, and sales are 350,620, 520,440, and 1,494,120 respectively. 2. For BB Merchandising, using the FIFO cost flow assumption, the cost of goods sold is 2,988,400 and the ending inventory at cost is 1,027,850. 3. For ABC Corp, the balance of accounts receivable as of June is 391,000 and the balance of loans payable as of June is 166,200.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    302 views5 pages

    Midterms I Answer Key

    Uploaded by

    aldric taclan
    1. For AA Merchandising, the adjusted balances for accounts receivable, inventories, and sales are 350,620, 520,440, and 1,494,120 respectively. 2. For BB Merchandising, using the FIFO cost flow assumption, the cost of goods sold is 2,988,400 and the ending inventory at cost is 1,027,850. 3. For ABC Corp, the balance of accounts receivable as of June is 391,000 and the balance of loans payable as of June is 166,200.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 5

    Multiple Choice Problems

    1. AA Merchandising
    Accounts receivable Inventories Sales
    Unadjusted 376,500 525,000 1,520,000
    Recorded as sales but should be in Jan. (8,680) (8,680)
    (14,200) (14,200)
    (10,000) (10,000)
    (14,000) (14,000)
    Valid sales in December recorded in Jan 21,000 21,000
    7,240
    12,500
    (6,100)
    (18,200)
    Adjusted balance 350,620 520,440 1,494,120
    16. A 17. B 18. C

    2. BB Merchandising
    Cost Retail
    Beginning inventory 598,400 1,500,000
    Purchases 3,048,400 5,500,000
    Freight In 80,000
    Purchase returns (140,000) (180,000)
    Mark-ups 600,000
    Mark-up cancellations (100,000)
    COGAS - conservative 3,586,800 7,320,000 conservative
    Mark-downs (1,300,000)
    Mark-down cancellations 385,000
    COGAS - average 3,586,800 6,405,000 average
    Beginning inventory (598,400) (1,500,000)
    COGAS - FIFO 2,988,400 4,905,000 FIFO

    COGAS @ retail 6,405,000


    Less: Cost of sales @ retail
    Sales 4,470,000
    Sales returns (150,000)
    Employee discount 400,000 4,720,000
    Ending inventory @ retail 1,685,000

    Ending
    Ending inventory @ cost: inventory count Inventory Loss
    Conservative 825,650 649,600 176,050
    Average 943,600 649,600 294,000
    FIFO 1,027,850 649,600 378,250

    3.ABC Corp
    23. D. None - no gain or loss since there is no transfer of significant risks and rewards. The asset is not derecognized
    24. Ans.
    Beginning: 800,000
    Collections - May (200,000)
    Sales discount (5,000)
    Collections - June (150,000)
    Sales discount - June (4,000)
    Sales returns - June (30,000)
    Write-off (20,000)
    Balance of AR - June 391,000 24. A

    25. Ans
    Beginning balance of Loans payable 500,000
    Payment of principal in May
    Collections: 200,000
    Less: Interest 10,000 190,000
    Balance of Loans payable - May 310,000
    Payment of principal in June
    Collections: 150,000
    Less: Interest 6,200 143,800
    Balance of Loans payable - June 166,200 25. B

    26. Ans
    Proceeds from the discounting of note:
    Maturity value:
    Principal 600,000
    Interest 36,000 636,000
    Less: Discount 10,600 625,400

    Carrying value of note


    Principal 600,000
    Accrued interest 24,000 624,000
    Gain/(Loss) 1,400

    CC Corp,
    Purchases 11 months Purchases 12 monInventory 11 months
    Unadjusted balances: 1,080,000 1,280,000 220,000
    I. Unrecorded purchases in May 12,000
    II. Advances to suppliers (4,000) (4,000)
    Adjusted 1,088,000 1,276,000 220,000

    Sales 11 months 1,344,000


    COS:
    Beginning inventory 140,000
    Purchases 11 months 1,088,000
    COGAS: 1,228,000
    Ending Inventory - May (220,000) 1,008,000
    Gross profit 336,000 0.25

    Cost of good sold during June:


    Sales 12 months 1,536,000
    Less: Sales at cost (16,000)
    Sales at 25% GP 1,520,000
    Cost ratio 0.75
    Cost of sales 1,140,000
    Cost of sales - sold at cost 16,000
    Total cost of sales for 12 months 1,156,000 28. C
    Cost of sales for 11 months 1,008,000
    Cost of sales during June 148,000 29. C
    Ending Inventory:
    Beginning inventory 140,000
    Purchases 12 months 1,276,000
    COGAS: 1,416,000
    COS 1,156,000
    Ending Inventory: 260,000 30. D
    Cost of sales
    942,000

    (7,240)
    (12,500)
    6,100
    18,200
    946,560
    19. A

    0.49

    0.56

    0.61

    ntory Loss
    20. B
    21. C
    22. C

    The asset is not derecognized.


    26. B

    ntory 11 months

    27. D

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