Reference no: EM13923976

Part 1. Journal entries from Chapter from the purchasing side (perpetual inventory) -

Directions: Prepare the journal entries for each of the four transactions, in good form for Belinda's Bath Bounty. You can use the Journal entry page at the end of this document to enter your answers. This company uses a perpetual inventory system. Each JE is worth 4 points.

On April 5, purchased merchandise from Waxen Goodness Company for $15,000 terms 2/10, net/30, FOB shipping point.
On April 8, returned damaged merchandise to Waxen Goodness Company and was granted a $2,000 credit for returned merchandise.
On April 13 paid the amount due to Waxen Goodness Company in full (took advantage of the discount).
On April 16, Belinda's Bath Bounty Co. received a shipping bill for $400 for delivery of the merchandise delivered by Waxen Goodness. Payment is due by May 16th.

Part 2. Journal entries from Chapter 7 from the selling side (perpetual inventory) -

Directions. Prepare the journal entries for each of the three transactions, in good form for Wei Asian Imports. You can use the Journal entry page at the end of this document to enter your answers. This company uses a perpetual inventory system. Remember, there are 2 JEs to record sales and returns.

On September 1, Wei Asian Imports Company had an inventory of 300 jade figurines at a cost of $180 each. The company uses a perpetual inventory system. During September, the following transactions occurred.

September 6. The Trade Shop, a customer of Wei Asian Imports purchased 25 of the figurines, paying $500 each. The amount was added to the customer's account. The customer is given credit terms of 1/10, n/30.

On September 9th, The Trade Shop returned 4 of the figurines. They had minor discoloration in them. Wei Asian imports gave the customer full credit. These items were returned to inventory.

On September 11th a check for the balance due, net of discounts and returns was received by Wei Asian Imports from The Trade Company for their purchases.

Part 3. An inventory problem from Chapter 8 for FIFO, LIFO and Weighted Average/Average Cost

(Periodic system) -

Nelson Company had 1,000 units in beginning inventory at a total cost of $15,250. The company purchased 2,000 units at a total cost of $26,000. At the end of the year, Nelson Company had 800 units in ending inventory.

3.1 Compute Cost of Goods Sold and Ending Inventory assuming FIFO is used

3.2 Compute Cost of Goods Sold and Ending Inventory assuming LIFO is used

3.3 Compute Cost of Goods Sold and Ending Inventory assuming Weighted Average/Average Cost is used

Be sure to show your calculations for partial credit. Use the pages of the answer sheets for Part 3.

Part 4. Chapter (Old Edition of Hermanson). A Bank Reconciliation and related Journal Entries from Chapter 8 (Old Edition) - 21 points

Please use the following information to complete a bank reconciliation for the Flag Company.

The ledger account for Cash showed a balance of $125,568 on October 31.
The October bank statement showed a closing balance of $114,828.
The Flag Company's manager deposited $16,000 in the bank's night depository on October 31. Therefore, the bank had not recorded it on the bank statement for October.
The bank statement included a debit memorandum from the bank for a $50 monthly service charge.
Comparison of the bank statement with the book's records revealed that the accountant miss-recorded one of the checks. The amount for check #722 was incorrectly recorded as $915. The correct amount was $519. The bank statement showed the correct amount. The check was for payment to a supplier (A/P)
A credit memorandum included by the bank showed that the bank collected a $4,000 Note Receivable payment from Lillian Berchette (a customer of Flag Company). The proceeds were deposited in the Flag Company account.
The bank statement did not include three checks written late in the month. They were: #715, for $315, #720 for $524 and #728 for $275.
A customer of the Flag Company, Sharon Jameson, had written a check for $200 in payment for her account balance. It showed up on the bank statement as a NSF check. It had been included with an October 26th deposit, but the bank deducted that amount on the October 31 statement.

Directions:

Please complete the bank reconciliation using the form below. The Adjusted Cash Balance is given for the Bank side and the Book side as a Check Figure. Each correct amount is worth 1.5 points (9 points).
Then prepare the journal entries needed to adjust the accounts at October 31. You can use the pages on the answer sheet. (12 points total).

Part 5. Chapter Adjusting journal entry for the Allowance for Uncollectible Accounts using the percentage-of-receivables method (6 points)

Basehart company uses the percentage-of-receivables basis to record bad debts expense. It estimates that 2% of accounts receivable will become uncollectible. Accounts Receivable is $900,000 at the end of the year, and the allowance for Uncollectible accounts has a Credit balance of $3,000. Prepare the journal entry to record bad debts expense for the year. Show your work for partial credit. Remember, you need to consider the balance in the Allowance account.

Part 6. Adjusting journal entry for the Allowance for Uncollectible Accounts using the percentage-of-sales method (6 points)

Lifestyles Limos uses the percentage-of-sales basis in FY 2012 to record bad debts expense. The company estimates that 2.5% of net credit sales will be uncollectible. Net sales for FY 2012 were $400,000, and the allowance for Uncollectible accounts had a balance in it totaling 3,500CR. Prepare the adjusting journal entry to record bad debts expense at the end of FY 2012. Think, do you use the balance in the Allowance account for this method?

Part 7. Journal entries for Notes Receivable

Please use the following information to answer the next three questions.
SHOW YOUR WORK WHERE APPROPRIATE!

One of the customers for Larry's Fun House is a daycare center, whose owner has had some financial difficulties. She owes Larry's Fun House $24,000, which Larry's accountant correctly recorded as Accounts Receivable. Delores Mims, owner of Wee Care Daycare came in to set up payment arrangements with Larry's accountant. Larry's agreed to accept a Note from Ms. Mims with the following terms

The Note is for $24,000
The interest rate is 6%
The note was issued on October 1, 2011
The note will be repaid in 12 months, on September 30, 2012

What is the correct journal entry to record Larry's Fun House receiving the Note Receivable?

What is the correct journal entry to record Interest Revenue earned in 2011?

What is the correct journal entry to record repayment of the Note with interest on September 30, 2012?