Financial Accounting Final Answers

ANSWERS1 a) 1 b) 1 c) 1 d) 1 e) 1 f)This transaction has no effect on the equilibrize sheet since this is only 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, thirtieth gross sales rev upenue$10,000COGS $(6,500)GROSS MARGIN $ 3500Salary disbursal $(1,000) permit put down $(2,000)Utilities Expense $(cc)Depreciation Expense $(90)TOTAL EXPENSES $ (3290)Net Income 3500 3290 = $ 210 BALANCE SHEET as of April, thirtieth bills 3,870 Acc / Pay 5,000 A/R 10,000 ( lancinating Mat 11,800 + Finished Goods1,500) Inv 13,300 essential Current additions $ 27,170 resume Current Liabilities $ 5,000 (Depreciation $90) PPE (Net) $ 5910 C/S $ 30,000 prepaid Rent $ 2000 R/E $ 80 Total Non-Current Assets $ 7,910 SHE $ 30,080 A = $ 35,080 = L + E = 30,080 + 5,000 = $ 35,080 Age Amount Estimate to be Uncollectible Required ease in Allowance 1-30 years $600,000 %% 0. 70% $4,200 31-60 Days $175,000 % 1. 20% $2,100 61-120 Days $70,000 % 1 1% $7,700 More than 120 Days $10,000 % 65% $6,500 Year- conclusion equilibrize of allowance for doubtful accounts = $20,500 a) The credit balance in the allowance for spoilt accounts is $ 2,500 20,500 2,500 = 18,000 3 b) In case of skimming the adjusting journal entry, since it would show outlay understated balance sheet equation would be overstated equivalence otherwise. The reason to that is removal of this amount would present the company as if it contains higher(prenominal)(prenominal) receivable accounts. 4 a i) Cost of Goods Available for Sale = AFS = InvB + Purchases = = (3,50066) + (340064. 75)+(3,20064. 30) = $ 656,910COGS (LIFO) = (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) Cost 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 unit of measurements = 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 computer science in order to minimize Taxes. The reason for that is in LIFO, which is last in first out method costs of goods are figure head start from the latest purchases, eventually with higher unit costs. So since the expenses will be shown higher taxes for this period shall be minimized. c) Thomas Engine Company is involve to use FIFO method should they choose to report higher lettuce in March. As per FIFO cost for sold goods are calculated starting from the first received material (earlier inventory mostly as in this example) consequently with lower unit costs will fool place in calculations for profits. 5) Original Cost = $ 177,600, Salvage Value= $ 9,600, delusive Useful Life = 6 years Assumed Total in operation(p) Hours = 30,000 hrs a i) Straight Line Method sightly Depreciation Expense = (177,600 9,600) / 6 = 28,000 $/per year End of Year Depreciation Expense ($) concord Value ($) 1 28,000 149,600 2 28,000 121,600 3 28,000 93,600 ii) SYD Method EoY Depreciable Base ($) Depr. yard Depr. Expense ($) Accumulated Depr. $) Book Value ($) 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) Activity 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 Average Depreciation Expense = (177,600 9,600)/6 = 28,000 $/per yearAccumulated Depreciation Expense at the end of 3rd year is = 28,000 x 3 = $ 84,000 d) As per SYD Table higher up Book Value at the end of the 2nd year is $ 89,600. Sold Price = $ 73,000 Loss = 89,600 7 3,000 = $ 16,600 Accordingly e) As per tables above Book set 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 exactly the half of sham useful life, total operating is (4,500 + 5,000 + 5,500) 15,000 hrs, which is also exactly half of the take for granted 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 ($) 4,600 4,600 Total retentive Term Liabilities ($) 10,000 Total SHE ($) 61,400 61,400 a) Long Term Debt proportionality= LTD / Total Assets = 0 / 66,000 = 0 b) Debt Equity 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 silver. 100,000 CR C/S.. 100,000 DR Equipm ent. . 225 CR Acc Payable.. 225 DR Cash. . 5,000 ? CR Acc Receivable 5,000 A = L + E A = L + E DR Prepaid Insu Exp . 3,000 CR Cash. 3,000 A = L + E DR Acc Receivable . 5,000 CR Sales Rev. 5,000 A = L + EDR Prepaid Rent. 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, 1st) DR Cash.. . . $ 30,000 CR Common Stock. $ 30,000 Apr, 2nd ) DR PPE . . $ 6,000 CR Cash.. $ 6,000 Adjusting Entry on Apr, 30th ) DR Depreciation Exp. $ 90 CR Acc Depreciation. $ 90 Apr, 4th ) DR stock-taking.. .. $ 10,000 CR Cash. $ 10,000 Apr, 1st ) DR Prepaid Rent.. $ 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 Progress .. .. $ 8,000 CR Raw Material 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 tax.. . . $ 10,000 Apr, 30th ) DR COGS .. $ 6,500 CR Inventory. . . $ 6,500 Apr, 30th ) DR Dividend .. .. $ cxxx CR Cash . . $ cxxx 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 Disposal. $ 16,600 CR Machinery.. $ 177,600 A = L + E R/EB + N/I = R/EE + Dividend 0 + 210 = R/EE + 130 R/EE = $ 80