Question

In: Accounting

Part of the accounting records for the last quarter of 2014 of Alexandra Corp., a Canadian...

Part of the accounting records for the last quarter of 2014 of Alexandra Corp., a Canadian private company applying IFRS, were destroyed due to a software malfunction. You have been tasked with reconstructing the accounting records related to inventory and receivables.

The following information has been salvaged:

Extract from the Quarterly Statement of Financial Position as at December 31, 2014

	Oct 1, 2014	Dec 31, 2014
Current Assets
Net realizable value of Accounts receivable	$4,700	?
Inventory	300	?

Aging of receivables analysis as at December 31, 2014 (Incomplete)

Days past due	Amount	Estimated uncollectible %	Estimated uncollectible amount	Observations
0-30		3%
30-120		10%
>120	$2,000	50%		$500 of the $2,000 were deemed completely uncollectible

By talking to the CEO, the controller, and other employees of the accounting department you were also able to gather the following information:

Firm’s Accounting Policies:

a) The company uses the periodic inventory system and the FIFO cost flow assumption.

b) The company applies the aging of receivables analysis to adjust the AFDA at year-end.

The only inventory and sale-related transactions during the quarter were:

1. On October 15, 2014, Alexandra Corp. sold 80 units at $10 each, shipped on the same day, FOB destination, and arrived 3 days later, freight-out of $30 for the entire shipment, and payment within 30 days. As at December 31, 2014, the client had still not paid.

2. On November 10, Alexandra Corp. received from its supplier a shipment of 1,000 units costing $5 each. Alexandra Corp. also had to cover shipping costs of $500, import duty taxes of $100 (non-refundable).

3. On December 1, Alexandra Corp. sold 500 units at $10 each, 2/10, n/30. The client paid half of the total amount on December 5, but made no other payment since.

4. On December 15, 2014, Alexandra Corp. signed a contract for the purchase of 500 units of inventory from a Canadian supplier at a price of $6.50 per unit. The supplier shipped the goods FOB destination on December 27. On December 31, 2014, the goods had not yet been delivered, and no invoice had been received.

Other information:

a) The physical count of inventory at the end of the previous quarter was 100 units. The physical count of inventory at the end of December 2014 was 520 units.

b) The beginning balance for Gross Accounts Receivable for the quarter was $5,000.

c) The CEO estimates that inventory on hand at the end of 2014 could be sold for a per unit price of $5.50, with $0.10 per unit costs to sell.

Required:

1. Re-construct the journal entries for the transactions during the quarter.

2. Make ALL necessary quarter-end adjusting entries as at December 31, 2014. Show your computation. (Hint: there are 4 adjusting entries needed to (1) record the write-down of inventory (2) record COGS and update ending inventory (3) record write-off (4) record bad debt expense using aging analysis.)

3. Present to the CEO the calculation of gross profit.

(Please use the Gross Method to record the sales discount)

Expert Solution

Part of the accounting records for the last quarter of 2014 of Alexandra Corp., a Canadian private company applying IFRS, were destroyed due to a software malfunction. You have been tasked with reconstructing the accounting records related to inventory and receivables.

ekkarill92 answered 1 year ago

Part of the accounting records for the last quarter of 2017 of Boswell Corp., a Canadian...

Part of the accounting records for the last quarter of 2017 of Boswell Corp., a Canadian private company applying IFRS, were destroyed due to a software malfunction. You have been tasked with reconstructing the accounting records related to inventory and receivables. The following information has been salvaged: Extract from the Quarterly Statement of Financial Position as at December 31, 2017 Oct 1, 2017 Dec 31, 2017 Current Assets Net realizable value of Accounts receivable $9,400 ? Inventory 600 ? Aging...

a) What are the main features of the Canadian economy in the second quarter of 2014?...

a) What are the main features of the Canadian economy in the second quarter of 2014? Did Canada have a recessionary gap or an inflationary gap in 2014? How do you know? b) Use the AS - AD model to show the changes in aggregate demand and aggregate supply that occurred in 2013 and 2014 that brought the economy to its situation in mid-2014; c) Use the AS - AD model to show the changes in aggregate demand and aggregate...

review of the accounting records for the year 2014 reveal the following: a. The January 1,...

review of the accounting records for the year 2014 reveal the following: a. The January 1, 2014 balances are: Share Premium – Preference ……………………………….OMR 250,000 Share Premium – Ordinary …………………………………OMR 425,000 Retained Earnings ………………………………………….OMR 1,200,000. b. No errors have been made in recording 2014 transactions or in preparing closing entry for the net income. c. Preference shares are OMR 50 par, 7%, and cumulative; 15,000 shares have been outstanding since January 1, 2013. d. Ordinary shares are OMR 10 par,...

Khalil manufactures widgets. At the end of June 2014 an extract from the accounting records show...

Khalil manufactures widgets. At the end of June 2014 an extract from the accounting records show the following: Work in process inventory July 1, 2013 $ 47,000 Direct materials inventory July 1, 2013 $ 2,000 Electricity for plant $ 7,000 Customer enquiry centre wages $ 10,000 Plant cleaning services $ 3,000 Direct labour $ 34,000 Sales commission $ 8,000 Direct materials purchased $ 29,000 Depreciation expense (Plant Equipment) $ 9,000 Bad debts expense $ 4,000 Work...

At the beginning of 20X1, the accounting records of Friends Corp. reported the following: Preferred shares,...

At the beginning of 20X1, the accounting records of Friends Corp. reported the following: Preferred shares, 6,800 shares outstanding, no-par $ 226,440 Common shares, 181,000 shares outstanding, no-par 530,330 Contributed capital on common share retirement 110,900 Retained earnings 554,500 During the year, the company acquired and retired shares, while other shares were issued: 15 March 24,800 common shares bought and retired at $5 per share 16 March 4,000 preferred shares bought and retired at $36.20 per share 20 May 8,800...

Cougar Plastics Company has been operating for three years. At December 31, 2014, the accounting records...

Cougar Plastics Company has been operating for three years. At December 31, 2014, the accounting records reflected the following: Cash $ 22,000 Accounts payable $ 20,000 Investments (short-term) 2,600 Accrued liabilities payable 2,800 Accounts receivable 3,700 Notes payable (short-term) 6,800 Inventory 28,000 Notes payable (long-term) 42,000 Notes receivable (long-term) 2,700 Common stock 10,500 Equipment 47,000 Additional paid-in capital 94,500 Factory building 95,000 Retained earnings 28,500 Intangibles 4,100 During the year 2015, the company had the following summarized activities: a. Purchased...

The accounting records of Omar Company contained the following information for last year: Beginning Ending Direct...

The accounting records of Omar Company contained the following information for last year: Beginning Ending Direct materials inventory........................ $9,000 $7,000 Work in process inventory....................... $17,000 $31,000 Finished goods inventory........................ $10,000 $15,000 Manufacturing costs incurred Direct materials used............................... $72,000 Overhead applied..................................... $24,000 Direct labor cost (10,000 hours).............. $80,000 Depreciation............................................. $10,000 Rent......................................................... $12,000 Taxes........................................................ $8,000 Cost of goods sold................................... $157,000* * Selling and administrative costs incurred Advertising.............................................. $35,000 Rent......................................................... $20,000 Clerical..................................................... $25,000 *Does not include over- or underapplied overhead. 1. The...

At the beginning of 2016, Better Corp.’s accounting records had the following general ledger accounts and...

At the beginning of 2016, Better Corp.’s accounting records had the following general ledger accounts and balances. BETTER CORP. Accounting Equation Event Assets = Liabilities + Stockholders’ Equity Accounting Titles for Retained Earnings Cash Land Notes Payable Common Stock Retained Earnings Balance 1/1/2016 10,000 20,000 12,000 7,000 11,000 Better Corp. completed the following transactions during 2016: 1. Purchased land for $5,000 cash. 2. Acquired $25,000 cash from the issue of common stock. 3. Received $75,000 cash for providing services to...

Do It! Review 6-2 The accounting records of Whispering Winds Corp. show the following data. Beginning...

Do It! Review 6-2 The accounting records of Whispering Winds Corp. show the following data. Beginning inventory 3,010 units at $6 Purchases 8,130 units at $8 Sales 9,090 units at $11 Determine cost of goods sold during the period under a periodic inventory system using the FIFO method, the LIFO method, and the average-cost method. (Round answers to 0 decimal places, e.g. 125.) FIFO LIFO Average-cost Cost of goods sold $enter a dollar amountEntry field with incorrect answer 6. $enter...

ABC Corp 2014 Income Statement ($ in millions) &

ABC Corp 2014 Income Statement ($ in millions) Net sales $9,610 Less: Cost of goods sold 6,310 Less: Depreciation 1,370 Earnings before interest and taxes 1,930 Less: Interest paid 630 Taxable Income $1,300 Less: Taxes 455 Net income $ 845 Dividends paid to shareholders $ 275 ABC COrp 2013 and 2014 Balance Sheets ($ in millions) 2018 2019 2018 2019 Cash $ 310 $...