Assignment
1. KLA Corp. had the following situations during the last 4 years of operation:
i. The Allowance for Uncollectible Accounts has a $1,400 credit balance prior to adjustment. Net credit sales during 2011 are $700,000 and 4% are estimated to be uncollectible. Accounts Receivable has a balance of $110,000 on Dec 31, 2011.
ii. The Allowance for Uncollectible Accounts has a $750 debit balance prior to adjustment. Based on an aging schedule of accounts receivable prepared on December 31, 2012, $27,900 of accounts receivable are estimated to be uncollectible. Accounts Receivable has a balance of $114,000 on Dec 31, 2012.
iii. The Allowance for Uncollectible Accounts has a $1,300 credit balance prior to adjustment. Based on an aging schedule of accounts receivable prepared on December 31, 2013, $25,000 of accounts receivable are estimated to be uncollectible. Accounts Receivable has a balance of $107,000 on Dec 31, 2013.
iv. The Allowance for Uncollectible Accounts has a $500 debit balance prior to adjustment. Net credit sales during 2014 are $875,000 and 2% are estimated to be uncollectible. Accounts Receivable has a balance of $125,000 on Dec 31, 2014.
Prepare the adjusting journal entries needed for these years.
2. Able Company had the following inventory data for the current month.
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Units
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Unit Price
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Total
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Inventory 12/1/13
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10
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$ 50
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$ 500
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Purchase
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30
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$ 60
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$ 1,800
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Purchase
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25
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$ 65
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$ 1,625
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Available for Sale
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65
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$ 3,925
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Inventory 12/31/13
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15
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|
|
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Quantity Sold
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50
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Quantity Sold 50
Compute cost of goods sold for each of the following methods:
i. Average cost
ii. First in, first out (FIFO)
iii. Last in, first out (LIFO)
3. On January 3, 2014, Pete's Excavating Company purchased a bulldozer for $180,000. In addition to the basic purchase price, the company paid sales tax of $10,000 and freight charges of $10,000. The bulldozer will be used for 36,000 machine hours. Pete estimates that the bulldozer will have a useful life of 5 years and no residual value.
Required:
I. Compute the cost of the asset.
II. Compute the depreciation expense for 2014 and 2015 using the:
i. straight-line method
ii. units-of-production method assuming the bulldozer was used 5,000 machine hours in 2014 and 20,000 machine hours in 2015.
iii. double declining balance method
4. In the most recent year of operations, Bertha's Games sold merchandise costing $80,000 for $170,000. All merchandise was sold under a one-year warranty. At the time of sale, Bertha estimated that warranty claims would amount to 4% of sales. During the year, she replaced defective merchandise for $3,000. All transactions were cash transactions.
i. Prepare journal entries to record all transactions related to the warranty.
ii. Based solely on the above information, determine Bertha's Games operating income for the year.