Bad debts >:(
Write-offs always have two journal entries: one regular journal entry and one adjusting entry. What do these journal entries look like? What accounts are debited and credited?
JE: DR Allowance for D/A, CR A/R
AJE: DR Bad debt exp, CR Allowance for D/A
Sale of $10,000 on terms of 1/10, n/20.
What is the journal entry to record the initial sale according to the net method?
DR A/R 9900, CR Sales revenue 9900
If Snapple Inc. understates its ending inventory, what are the effects on cost of goods sold and net income for the current year?
Cost of goods sold will be overstated and net income will be understated.
Under what account are shipping costs for inventory recorded?
Inventory
Sales: $750,000
COGS: $275,000
A/R in 2019: $310,000
A/R in 2020: $390,000
What is the A/R turnover?
2.14
Bad debt expense for the year is estimated to be $49,000. If the balance of the Allowance for Doubtful Accounts is a $7,000 debit before adjustment, what is the balance after adjustment?
credit balance of $42,000
What's your favorite color?
nice :o)
During a period of rising purchase prices, which inventory costing method will yield the highest cost of goods sold?
LIFO
If something is sold FOB destination, who pays for shipping and when does ownership transfer from the seller to the buyer?
Seller pays for shipping, and ownership transfers when the merchandise arrives at its destination.
Grass Pro Shops is a merchandise company. The company's sales for the year were $420,000 and COGS was $196,000.
What is the company's gross profit margin ratio?
53%
Hobbit Outfitters uses the aging method to account for bad debt expense. Based on an aging of accounts receivable, $35,500 of accounts receivable are estimated to be uncollectable. On January 1, 2018, Allowance for Doubtful Accounts had a credit balance of $47,750. During the year, $51,000 of accounts receivable were written off as uncollectable. What is the bad debt expense of the company for 2018?
$38,750
Lumberjack Lumber Co. sells $15,000 of lumber to House Contractors, Co. on April 8th at a discount of 3/15, n/30. What is the journal entry (gross method) for Lumberjack Lumber Co. if House Contractors pays in full on April 15th?
DR Cash 14,550
DR Sales Discount 450
CR A/R 15,000
Rick's Sporting Goods had the following inventory for July:
1 Beginning Inventory 175 units @ $4.50
10 Purchase 240 units @ $5.00
15 Purchase 130 units @ $5.60
20 Purchase 200 units @ $6.50
Ending inventory 265 units
The company sold 480 units in July.
The periodic inventory system is used. What is the COGS using the LIFO method?
$2778
Doofensmirtz Evil Inc. purchases merchandise from Perry the Platypus Productions with terms 2/10, n/30, FOB shipping point. Whose inventory is the merchandise counted as while in transit?
Doofensmirtz Evil Inc.
Bob's Market makes a $2210 sale; the customer pays with an American Express credit card. American Express charges a 2% fee for their services. What is the journal entry to record this credit card sale on behalf of Bob's Market?
DR Cash 2165.8
DR Credit Card Expense 44.2
CR Sales Revenue 2210
The following data is from the records of Walt Gisney company for 2019:
credit sales $425,000
Accounts Receivable $315,000
Allowance for Doubtful Accounts $13,000
The percent of noncollectable accounts receivable is 3%. What is the balance of Allowance for Doubtful Accounts after adjusting for bad debt expense? (% of credit sales method)
credit balance of 25750
Books-A-Thousand makes a $21,000 sale on January 1 with the terms 4/10, n/30. The buyer pays on January 16th. What is the journal entry on January 16th for the Books-A-Thousand, assuming the company uses the net method?
DR Cash 21000
CR Sales Discount Forfeited 840
CR Accounts Receivable 20160
Rick's Sporting Goods had the following inventory for August:
1 Beginning Inventory 265 units @ $5.00
10 Purchase 320 units @ $5.20
15 Purchase 75 units @ $6.30
20 Purchase 180 units @ $7.00
Ending inventory 125 units
The periodic inventory system is used. What is the COGS using the FIFO method?
$3846.50
Douglasville Productions, Inc. ordered merchandise from the Atlanta Company on May 10, 2020, for $33,000. The credit terms were 3/10, n/30. The goods were invoiced and shipped FOB shipping point on May 11. Douglasville Productions, Inc. received the merchandise on May 17 and paid the amount due on May 19. When did ownership transfer from the seller to the buyer?
May 11
Beginning Inventory $165,000
Ending Inventory $190,000
Net sales $350,000
COGS $221,000
How many days does it take the company to turn inventory?
292 days
The following data from Wayne Enterprises for 2019:
Net credit sales $550,000
Beginning Allowance for D/A $15,000
Ending Accounts Receivable $325,000
Cash collections on account $425,000
A/R written off $13,500
Estimated uncollectable accounts (aging) $9900
Percent of uncollectable accounts based on past 2%
What is the journal entry to recognize Wayne Enterprises' bad debt expense for the year using the aging method?
DR Bad debt exp $8400
CR Allowance for D/A $8400
Macrosoft Corp. made a sale on March 1st of a note receivable for $88,000 with a 6% interest rate. The note is due on August 31st. Record the journal entry for the receipt of the note receivable payment.
DR cash 90640
CR interest revenue 2640
CR notes receivable 88000
Rick's Sporting Goods had the following inventory in September:
1 Beginning Inventory 125 units @ $5.00
10 Purchase 150 units @ $5.50
15 Purchase 230 units @ $6.00
20 Purchase 120 units @ $6.50
Ending inventory 170 units
What is the company's COGS using the weighted average cost method?
$2628.08
Cactus Supply Co. has an inventory of $425,000 at the end of 2019. On Dec 29, they sold $6,000 worth of cacti FOB destination. The sale shipped on Dec 30 and arrived at its destination on Jan 2. What is Cactus Supply Co.'s inventory on Dec 31?
$425,000
An accountant for Dunder Mifflin has prepared the following information for the company's inventory at the end of 2020:
Model Quantity Cost MV
A 30 $100 $120
B 52 140 125
C 84 85 80
D 63 105 128
What is the journal entry to recognize the loss to inventory on the basis of LCM?
DR COGS 1200
CR Inventory 1200