Reference no: EM13335332
Clarke Company uses the periodic inventory method and had the following inventory information available:
|
|
Units |
Unit Cost |
Total Cost |
| 1-Jan |
Beginning Inventory |
100 |
$4 |
$400 |
| 20-Jan |
Purchase |
400 |
$5 |
$2,000 |
| 25-Jul |
Purchase |
200 |
$7 |
$1,400 |
| 20-Oct |
Purchase |
300 |
$8 |
$2,400 |
|
total |
1000 |
|
$6,200 |
A Physical count of inventory on December 31 revealed that there were 400 units on hand.
Answer the following independent questions and show computations supporting your answers:
1 Assume that the company uses FIFO method. That Value of the ending inventory at December 21 is:
2 Assume that the company uses Average-Cost method. That Value of the ending inventory at December 21 is:
3 Assume that the company uses LIFO method. That Value of the ending inventory at December 21 is:
4 Determine the difference in the amount of income that the company would have reported if it had used the FIFO method instead of the LIFO method. Would income have been greater or less?
The income statement approach to estimating uncollectible accounts expense is used by Landis Company.
On February 28, the firm had accounts receivable in the amount of $437,000 and Allowance for Doubtful Accounts had a credit balance of $2140 before adjustment. Net credit sales for February amounted to $3,000,000.
The credit manager estimated that uncollectible accounts expense would amount to 1% of net credit sales made during February.
On March 10, an accounts receivable from Kathy Brown for $6100 was determined to be uncollectible and written off. However, on March 31, Brown received an inheritance and immediately paid her past due account in full.
a. Prepare the journal entries made by Landis on the following dates:
1. February 28
2. March 10
3. March 31
b. Assume no other transactions occurred that affected the allowance account during March. Determine the balance of Allowance for Doubtful Accounts at March 31.