Part 1 On January 1, 2021, ABC Inc. started business with inventory on hand of $34,000....

Part 1

On January 1, 2021, ABC Inc. started business with inventory on hand of $34,000. The company reported purchases for the year of $136,000 and sales of $306,000. The value of inventory on hand on December 31, 2021 was $45,000 at end of year prices. The price index for 2020 was 106. What should abc Inc. report as COGS for 2021 if they use Dollar Value LIFO as their inventory method?

Part 2

ABC Co. uses the conventional approach of the Retail Inventory Method. Their beginning inventory at cost (retail) was $786,000 ($1,226,000), purchases were $6,822,000 ($11,876,000), purchase discounts were $157,000 ($275,000), and freight in was $71,000. They also reported net markups of $1,195,000, net markdowns of $1,643,000, and net sales of $10,666,000. Based on this information, what their ending inventory at retail?

Part 3

On 6/1/1988, ABC Corp. used $9,647,000 of its accounts receivable as collateral on a $7,700,000 loan. The interest rate on the loan was 3% and the bank required an upfront finance payment of 2%. Also, they must remit any cash collected on the assigned receivables as payment on the loan each month. What would be the debit to loans payable when ABC Co. made the first payment on 7/1/1988?

Part 4

ABC Co. started business on January 1, 2011. On December 31, 2011, the company reported Accounts Receivable of $12,950,000. During the year, the company reported bad debt expense for the year of $1,036,000 and wrote off $673,000 as uncollectible. Based on this information, what should ABC Co. report as Accounts Receivable, net of bad debt for 2019?

Expert Solution

Answer 1

	Cost of Goods sold (COGS)
	Particulars	Amount in '$
	Opening inventory 1-1-2021	34,000
Add:-	Purchases	136,000
Less:-	Closing inventory 31-12-2021	(45,000)

	Cost of Goods sold (COGS)	125,000

Answer 2


	Cost	Retail
Beginning Inventory	786,000	1,226,000
Purchases	6,822,000	11,876,000
Freight-in	71,000
Cost of Goods Available for Sale	7,679,000	13,102,000
Cost to Retail Ratio
0.5861

Cost of Goods Available for Sale	7,679,000	13,102,000
− Sales		(10,666,000)
Ending Inventory		2,436,000
× Cost to Retail Ratio		0.5861
Ending Inventory		1,427,724

ekkarill92 answered 1 year ago

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