Financial Accounting Final Answers

ANSWERS1 a) 1 b) 1 c) 1 d) 1 e) 1 f)This transaction has no kernel on the isotropy sheet since this is solitary(prenominal) an order, no financial value.1 g) 1 h) 1 i) 1 j) 2 a) a b c d e f g h j k l 2 b)INCOME STATEMENT as of April, 30thgross revenue revolutions per minuteenue$10,000COGS $(6,500)GROSS MARGIN $ 3500 meshing disbursement $(1,000) betroth write off $(2,000)Utilities cost $(200) derogation Expense $(90)TOTAL EXPENSES $ (3290)Net Income 3500 3290 = $ 210 BALANCE public opinion poll as of April, 30th property 3,870 Acc / recompense 5,000 A/R 10,000 (Raw Mat 11,800 + accurate Goods1,500) Inv 13,300 bestow flow rate Assets $ 27,170 ingrained circulating(prenominal) Liabilities $ 5,000 (Depreciation $90) PPE (Net) $ 5910 C/S $ 30,000 Prepaid profligate $ 2000 R/E $ 80 Total Non-Current Assets $ 7,910 SHE $ 30,080 A = $ 35,080 = L + E = 30,080 + 5,000 = $ 35,080 days Amount Estimate to be spoiled Required counterpoise in alteration 1-30 Days $600,000 %% 0. 70% $4,200 31-60 Days $175,000 % 1. 20% $2,100 61- great hundred Days $70,000 % 11% $7,700 More than 120 Days $10,000 % 65% $6,500 stratum-end balance of allowance for doubtful accounts = $20,500 a) The credit balance in the allowance for uncollectible accounts is $ 2,500 20,500 2,500 = 18,000 3 b) In case of skimming the adjusting ledger entry, since it would show expense understated balance sheet equation would be amplify comparing otherwise. The crusade to that is removal of this hail would present the company as if it contains higher(prenominal) receivable accounts. 4 a i) bell of Goods on tap(predicate) for Sale = AFS = InvB + Purchases = = (3,50066) + (340064. 75)+(3,20064. 30) = $ 656,910COGS (last in first out) = (3,50066) + (340064. 75)+(15064. 30) = 231,000 + 220,150 + 9,645 COGS (LIFO) = $ 460,795 InvE = AFS COGS = 656,910 460,795 = $ 196,115 = (305064. 30) a ii) woo of Goods Available for Sale = AFS = $ 656,910 COGS (FIFO) = (3,20064. 30) + (3,40064. 75)+(45066) = 205,760 + 220,150 + 29,700 COGS (FIFO) = $ 455,610 InvE = AFS COGS = 656,910 455,610 = $ 201,300 = (305066) iii) Cost of Goods Available for Sale = AFS = $ 656,910 Total building blocks = 3,200 + 3,400 + 3,500 = 10,100 Total exchange Units = 3,600 + 3,450 = 7,050 COGS (FIFO) = (7,05065. 0405) = COGS (FIFO) = $ 458,536 InvE = AFS COGS = 656,910 458,536 = $ 198,374 = (305065. 0405) 4 b) They are to use LIFO calculation in order to smear Taxes. The reason for that is in LIFO, which is last in first out mode speak to of goods are calculated startle from the current purchases, eventually with higher unit costs. So since the expenses give be shown higher taxes for this stopover shall be minimized. c) Thomas Engine come with is required to use FIFO method should they choose to report higher profits in March. As per FIFO cost for sold goods are calculated starting from the first received material (earlier broth mostly as in this example) then with lower unit co sts will take place in calculations for profits. 5) fender Cost = $ 177,600, Salvage apprise= $ 9,600, expect Useful Life = 6 age Assumed Total Operating Hours = 30,000 hrs a i) Straight Line system sightly Depreciation Expense = (177,600 9,600) / 6 = 28,000 $/per grade End of Year Depreciation Expense ($) Book esteem ($) 1 28,000 149,600 2 28,000 121,600 3 28,000 93,600 ii) SYD Method EoY Depreciable Base ($) Depr. localize Depr. Expense ($) Accumulated Depr. $) Book mensurate ($) 1 168,000 6 / 21 48,000 48,000 129,600 2 168,000 5 / 21 40,000 88,000 89,600 3 168,000 4 / 21 32,000 120,000 57,600 a iii) action mechanism Method End of Year Hours Operated Depr.Expense ($) Book Value ($) 1 4,500 25,200 152,400 2 5,000 28,000 124,000 3 5,500 30,800 93,600 b) c) As it is S/L Method the median(a) Depreciation Expense = (177,600 9,600)/6 = 28,000 $/per divisionAccumulated Depreciation Expense at the end of third year is = 28,000 x 3 = $ 84,000 d) As per SYD Table above Book Value at the end of the 2nd year is $ 89,600. Sold Price = $ 73,000 Loss = 89,600 73,000 = $ 16,600 then e) As per tables above Book value at the S/L and Activity Methods are same ($ 93,600) and higher than SYD. The reason of this coencidence is at the end of 3rd year, which is precisely the half(a) of assumed useful life, meat operating is (4,500 + 5,000 + 5,500) 15,000 hrs, which is also exactly half of the assumed total operated hours. 6) Second Year Second Year w/ loan Total Current Assets ($) 36,000 46,000 Total Assets ($) 66,000 76,000 Total Current Liabilities ($) 4,600 4,600 Total Long marches Liabilities ($) 10,000 Total SHE ($) 61,400 61,400 a) Long Term Debt dimension= LTD / Total Assets = 0 / 66,000 = 0 b) Debt fair play Ratio = Total Debt / SHE = 4,600 / 61,400 = 0. 75 c) Current Ratio = Current Assets / Current Liabilities = 36,000 / 4,600 = 7. 82 d) LTD / Total Assets = 10,000 / 76,000 = 0. 13 e) Total Debt / SHE = 14,600 / 61,400 = 0. 24 f ) Current Ratio = 46,000 / 4,600 = 10 DR exchange. 100,000 CR C/S.. 100,000 DR Equipment. . 225 CR Acc Payable.. 225 DR change. . 5,000 ? CR Acc due 5,000 A = L + E A = L + E DR Prepaid Insu Exp . 3,000 CR silver. 3,000 A = L + E DR Acc Receivable . 5,000 CR Sales Rev. 5,000 A = L + EDR Prepaid carry. 1,000 CR Cash. 1,000 A = L + E DR Land. 25,000 CR C/S.. 25,000 A = L + E DR Equipment. 7,500 CR Acc Payable.. 6,800 CR Cash. 700 A = L + E A = L + E DR Acc Payable. . 225 CR Check/Cash.. 225 A = L + E Apr, beginning(a)) DR Cash.. . . $ 30,000 CR leafy vegetable Stock. $ 30,000 Apr, 2nd ) DR PPE . . $ 6,000 CR Cash.. $ 6,000 Adjusting launch on Apr, 30th ) DR Depreciation Exp. $ 90 CR Acc Depreciation. $ 90 Apr, quaternate ) DR arsenal.. .. $ 10,000 CR Cash. $ 10,000 Apr, 1st ) DR Prepaid acquire.. $ 4,000 CR Cash. $ 4,000Adjusting Entry on Apr, 30th ) DR Rent Expense. $ 2,000 CR Prepaid Rent . $ 2,000 Apr, 8th ) DR Work in be on .. .. $ 8,000 CR Raw tex tile in Use. $ 8,000 Apr, 10th ) DR Raw Material .. .. $ 5,000 CR Acc / Payable. $ 5,000 Apr, 14th ) DR Inventory Expense .. .. $ 4,000 DR Salary Expense$ 1,000 CR Cash.. . . $ 5,000 Apr, 15th ) DR Inventory Expense .. .. $ 800 DR Salary Expense$ 200 CR Cash.. . . $ 1,000 Apr, 30th ) DR Accounts Receivable .. 10,000 CR Sales Revenue.. . . $ 10,000 Apr, 30th ) DR COGS .. $ 6,500 CR Inventory. . . $ 6,500 Apr, 30th ) DR Dividend .. .. $ 130 CR Cash . . $ 130 DR Bad Debt Expense .. .. $ 18,000 CR Allowance for Doubt Acc. $ 18,000 Average Unit Cost = =656,910/10,100 = $ 65. 0405 DR Depr Exp $ 28,000 CR Acc Depr. $ 28,000 A = L + E DR Depr Exp $ 28,000 Acc Depr $ 28,000 Loss from Asset government. $ 16,600 CR Machinery.. $ 177,600 A = L + E R/EB + N/I = R/EE + Dividend 0 + 210 = R/EE + 130 R/EE = $ 80