FINANCIAL ACCOUNTING ACCT 201 ASSIGNMENT 4

FINANCIAL ACCOUNTING

ACCT 201

ASSIGNMENT 4

You are required to work in this assignment individually. Any suspicious activities or cheating will result zero grade in this assignment.

1. Describe perpetual system and periodic system [1 point]

2.Describe the Four Methods of Inventory Valuation [1 point]

3. The trial balance before adjustment of XYZ Company reports the following balances:

                                                                                        Dr.                  Cr.   

Accounts receivable                                                 $100,000

Allowance for doubtful accounts                                                    $    2,500

Sales (all on credit)                                                                            750,000

Sales returns and allowances                                       40,000

Instructions

        Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 6% of gross accounts receivable and (2) 1% of net sales. [1 point]

4. During June, the following changes in inventory item 29 took place:

            June   1     Balance                         1,400 units @ $24

                    14     Purchased                         900 units @ $36

                    24     Purchased                         700 units @ $30

                      8     Sold                                  400 units @ $50

                    10     Sold                               1,000 units @ $40

                    29     Sold                                  500 units @ $44

Perpetual inventories are maintained in units only.

Instructions

What is the cost of the ending inventory for item 29 under the following methods?  (Show calculations.)

(a)   FIFO. [1.5 points]

(b)   Average Cost. [1.5 points]

5. Calculate the Cost of Goods Sold under periodic method from the following information:              [2 points]

Sales                                        58450

Sales Return                                395

Purchases                                35975

Purchase Discount                  3590

Beginning Inventory               18780

Gross Margin                          25 % on Cost

                        Ending Inventory                    4721

6. Sales and purchases of company XYZ for the year 2010 had been $1,400,000 and $980,000, respectively. The beginning inventory (Jan. 1, 2010) was $170,000; XYZ's gross profit is 40% of selling price.

Instructions

Compute the cost of ending inventory. [2 points]