Comparing amounts for ending inventory—perpetual inventory—FIFO and LIFO (5-10 min] Models store bought and sold a line of dolls during December as follows: Beginning inventory 13 units •g.) $11 Sale 9 units Purchase 17 units of S13 Sale 13 units
Models uses the perpetual inventory system. Requirements 1 Calculate the cost of ending inventory using FIFO. 2 Calculate the cost of ending inventory using LIFO. 3 Which method results in a higher cost of ending inventory? E6-8 Comparing cost of sales in a perpetual system—FIFO and LIFO (15-20 min( Review the data in Exercise 6-7. Requirements I Calculate the cost of sales under FIFO. 2 Calculate the cost of sales under LIFO. 3 Which method results in the higher cost of sales?
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P9-4 U ing the allowance method for bad debts (20-35 min] t 30 ptember, the accounts of South Terrace Medical Centre (STMC) include the following:
Accounts receivable 5145000 Allowance for doubtful debts (credit balance) 3 500
During October to December, STMC completed the following selected transactions:
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Dec 28 Wrote off accounts receivable as uncollectable: Regan Ltd. $1300; Owen White. $900; and Rain Ltd, $700. Dec 31 Recorded bad debt expense bawd on the ageing of accounts receivable, as follows:
.¦•••••¦¦•¦•• Age of accounts Accounts receivable 1-30 days 31-60 days 61-90 days Over 90 days $165000 597000 $37000 514000 $17000 Estimated 16 uncollectable 0.3% 3% 30% 35% Requirements
1 Journalise the transaction. 2 Open the Allowance for doubtful debts T-accounts, and post entries affecting that account. Keep a running balance. 3 Show how South Terrace Medical Centre should report net accounts receivable on its 31 December balance sheet. Use the three line reporting format.
P11-5 ournalising, posting and reporting liabilities [30 min) The hside Inn general ledger at 30 September 2014, the end of its financial year, includes the following account balances before adjusting entries.
Accounts payable Current portion of non-current debt Interest payable Salary payable Employee income taxes payable
$36 210 Employer payroll tax payable – Unearned rent revenue – Non-current debt
The additional data needed to prepare the adjusting entries at 30 September are as follows: a The non-current debt is payable in annual instalments of $50000, with the next instalment due on 31 January 2015. On that date, Northsidc will also pay one year’s interest at 6%. Interest was last paid on 31 January. Make the adjusting entry to shift the current instalment of the non-current debt to a current liability. Also accrue interest expense at year-end. b Gross salaries for the last payroll of the financial year were S4 300. Of this amount, employee income taxes payable were 5900. c Employer payroll tax payable was 5850. d On 1 August, the business collected six months’ rent of S3 900 in advance.
1 What value would eagle report on the balance sheet at 3(l June 1014 for Inventory! E6-11 Applying the lower-of-cost-and-net-realisable-value rule to inventories (5 min] y Good Foods reports inventory at the lower of average cost or NRV. Prior to releasing its March 2012 financial statements, Naturally’s preliminary income statement, before the year-end adjustments, appears as follows:
NATURALLY GOOD FOODS Income statement—partial for the year ended 31 March 2012
Sales revenue 5117 000 Cost of sales 45 000 Gross profit S 72 000
Naturally has determined that the NRV of ending inventory is S17000. Cost is $18000. Requirements 1 Journalise the adjusting entry for inventory, if any is required. 2 Prepare a revised income statement to show how Naturally Good Foods should report sales, cost of sales and gross profit.