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ACC121 Seminar 4 EXAMPLES

M63.

Credit card sales (R)

$9,400

Less: Credit card discount (XR)

282

Net credit card sales

$9,118

Sales on account (R)

$10,500

Less: Sales returns (XR)

500
10,000

Less: Sales discounts (1/2 x $10,000 x 2%) (XR)

100

Net sales on account

9,900

Net sales (reported on income statement)

$19,018

E623.

Req. 1
JACKSON COMPANY
Bank Reconciliation, June 30, 2011

Company's Books

Bank Statement

Ending balance per Cash

Ending balance per bank

account

$6,000

statement

$6,060

Additions:

Additions:
Deposit in transit

None

1,900*
7,960

Deductions:

Deductions:

Bank service charge

40

Correct cash balance

$5,960

Outstanding checks

2,000

Correct cash balance

$5,960

*$18,100 $16,200 = $1,900.

Req. 2
Bank service charge expense (+E, SE) ...................................

40

Cash (A)........................................................................

40

To record deduction from bank account for service charges.

Req. 3
The correct cash balance per the bank reconciliation ($6,000 $40), $5,960

Req. 4
Balance sheet (June 30, 2011):
Current assets:
Cash ...................................................................................

$5,960

AP61.

Req. 1

(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
Total

Sales
Revenue
+227,000
+12,000
+23,500
NE
+26,000
NE
NE
NE
NE
+18,500
NE
NE
NE
+$307,000

Sales Discounts
(taken)
NE
NE
NE
+240
NE
-10
+1,800*
NE
+400
NE
NE
NE
NE
+$2,430

Sales Returns
and Allowances
NE
NE
NE
NE
NE
+500
NE
+3,500
NE
NE
NE
NE
NE
+$4,000

Bad Debt
Expense
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
NE
+3,040**
+$3,040

* [($88,200/.98) x .02] = $1,800


**Credit sales ($12,000 + $23,500 + $26,000 + $18,500) .
Less: Sales returns ($500 + $3,500) .............................
Net sales revenue...........................................................

$80,000
4,000
$76,000

Estimated bad debt rate .................................................

4%

Bad debt expense ...........................................................

$3,040

Req. 2

Income statement:
Sales revenue ........................................................... $307,000
Less: Sales returns and allowances ..............

4,000

Sales discounts ....................................

2,430

Net sales revenue .....................................................

$300,570

Operating expenses
Bad debt expense ...................................................

$3,040

AP71.

a)

Goods available for sale for all methods:

Unit

Total

Units

Cost

Cost

January 1, 2011Beginning inventory

390

$32

$12,480

February 20, 2011Purchase

700

34

23,800

June 30, 2011Purchase

460

37

17,020

Goods available for sale

1,550

$53,300

Ending inventory: 1,550 units (70 + 750) = 730 units

b) and c)

1.

2.

Average cost:
Average unit cost

$53,300 1,550=$34.39.

Ending inventory

(730 units x $34.39)

$25,105

Cost of goods sold

($53,300 $25,105)

$28,195

First-in, first-out:
Ending inventory

Cost of goods sold

(460 units x $37) +


(270 units x $34)

$26,200

($53,300 $26,200)

$27,100

3.

Last-in, first-out:
Ending inventory

Cost of goods sold

4.

(390 units x $32) +


(340 units x $34)

$24,040

($53,300 $24,040)

$29,260

Specific identification:
Ending inventory

Cost of goods sold

(658 units x $34) +


(72 units x $37)

$25,036

($53,300 $25,036)

$28,264