Question

Q.

The inventory of Ahrsun Ventures Corporation was destroyed by fire on February 29, 2020. The following data is for the first two months of the year: Sales $51,000, Sales Returns and Allowances $1,000, Purchases $28,200; Freight-In $1,200; and Purchase Discounts $1,400. According to the financial statements at year-end December 31, 2019 the balance of Merchandise Inventory was $20,000. Ahrsun Ventures has a gross profit rate of 30% on net sales and uses the periodic method of inventory.

REQUIRED: Determine the merchandise lost by fire.

Q.

On March 31 2020 the adjusted year-end account balances of ABC Company were as follows:

Accounts Payable	$16,250		Equipment	$70,000
Accounts Receivable	13,000		Interest Revenue	2,200
Accumulated Depreciation	12,000		Merchandise Inventory	26,250
Depreciation Expense	4,000		Rent and Utilities Expense	38,500
Cash	3,500		Salaries Expense	118,000
Cost of Goods Sold	299,850		Sales	505,000
Rob Williams, Capital	66,500		Sales Discounts	13,850
Rob Williams, Withdrawals	15,000

Required: Prepare, in good form, a classified Balance Sheet. ABC Company uses the perpetual inventory method.

Q.

The March 31, 2019 balance sheet of Kalakaua Corporation had Accounts Receivable of $525,000 and a credit balance in Allowance for Doubtful Accounts of $33,000. During the year ended March 31, 2020, the following transactions occurred: sales on account $1,550,000; sales returns & allowances, $120,000; collections from customers, $1,350,000; accounts written off $41,000; previously written off accounts of $5,000 were collected.

1. Using the above information, what is the balance of Accounts Receivable at March 31, 2020?

2. Suppose that it is the company policy to use the percentage of sales basis to estimate bad debts expense and anticipates 3% of net sales to be uncollectible, what is the adjusting entry at March 31, 2020? (Show calculations.)

Date	Account Titles and Explanations	Debit	Credit

3. Ignore the entry made in b) above.

Assume that it is company policy to use the aging of receivables basis to estimate bad debt expense. It determines that uncollectible accounts are expected to be $38,400.   What is the adjusting entry at March 31, 2020?   Assume the March 31, 2020 balance of Accounts Receivable is $575,000 and Allowance for Doubtful Accounts has an existing balance of $3,000 (cr). (Show calculations)

Date	Account Titles and Explanations	Debit	Credit

Q. The following figures are provided for Hanauma Marketing Corp. What is gross margin?

Sales revenue                                           $480,000

Cost of goods sold                                      300,000

Sales discounts                                           20,000

Sales returns and allowances                    15,000

Operating expenses                                     85,000

Interest revenue                                             5,000

a) $105,000

b) $140,000

c) $145,000

d) $ 90,000

e) $180,000

Answer 1