acc 510 module 2 home work

Use the information in the following adjusted trial balance for the Webb Trucking Company.

(1)

Calculate the current ratio. (Assume that the industry average for the current ratio is 1.5.) (Round your answer to 2 decimal places.)

  Current ratio

[removed]

Cost

[removed]  

  Gross profit

$ [removed]  

Duke Associates, antique dealers, purchased the contents of an estate for $37,600. Terms of the purchase were FOB shipping point, and the cost of transporting the goods to Duke Associates’ warehouse was $1,250. Duke Associates insured the shipment at a cost of $160. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of $500.

Determine the cost of the inventory acquired from the estate. (Omit the “$” sign in your response.)

  Cost of inventory

Harold Co. reported the following current-year purchases and sales data for its only product.

Date

Activities

Units

Units Sold at Retail

Jan.

Beginning inventory

135

 units

 @ $11.40

1,539

Sales

125

 @$41.40

Mar.

Purchase

285

 @ $16.40

4,674

July

435

 @ $21.40

9,309

Oct.

265

635

 @ $26.40

16,764

1,490

32,286

565

Assume that ending inventory is made up of 120 units from the March 14 purchase, 170 units from the July 30 purchase, and all 635 units from the October 26 purchase. Using the specific identification method, calculate the following. (Omit the “$” sign in your response.)

 (a) Cost of goods sold

 (b) Gross profit

Ripken Company’s ending inventory includes the following items.

Per Unit

  Product

Market

  Helmets

33     

55   

51    

  Bats

26     

73   

79    

  Shoes

47     

92   

96    

  Uniforms

51     

37   

37    

Compute the lower of cost or market for ending inventory applied separately to each product. (Omit the “$” sign in your response.)

LCM applied to products

  Total inventory at LCM

Current ratio

(2)

Compare Webb’s current ratio with the industry average.

Webb’s current ratio is above the industry average.

Webb’s current ratio is below the industry average.

The following adjusted trial balance of Webb Trucking Company.

  Account Title

  Cash

8,

10

0  

15

8,000  

32,548  

12,100  

160,160  

1

9,000  

113,000  

20,993  

52,997  

10,500  

9,718  

372,808  

WEBB TRUCKING COMPANY
Income Statement
For Year Ended December 31,

2011

Using the above adjusted trial balance to prepare Webb Trucking Company’s classified balance sheet as of December 31, 2011. (Be sure to list the assets and liabilities in order of their liquidity. Negative amounts should be indicated by a minus sign. Omit the “$” sign in your response.)

WEBB TRUCKING COMPANY
Balance Sheet
December 31, 2011

The following unadjusted trial balance contains the accounts and balances of Dalton Delivery Company as of December 31, 2011, its first year of operations.

  a.

Unrecorded depreciation on the trucks at the end of the year is $8,505.

  b.

The total amount of accrued interest expense at year-end is $8,000.

  c.

The cost of unused office supplies still available at the year-end is $600.

Use the above information about the company’s adjustments to complete a 10-column work sheet.(Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

(2.1)

Prepare the year-end closing entries for Dalton Delivery Company as of December 31, 2011. (Omit the “$” sign in your response.)

General Journal

(2.2)

Determine the capital amount to be reported on its year-end balance sheet. (Omit the “$” sign in your response.)

  Ending balance

$   

The following adjusted trial balance contains the accounts and balances of Showers Company as of December 31, 2011, the end of its fiscal year.

Prepare the December 31, 2011, closing entries for Showers Company. (Omit the “$” sign in your response.)

Date

Dec. 31

Prepare the December 31, 2011, post-closing trial balance for Showers Company. (The items in the Trial Balance should be grouped as follows: Assets, Liabilities and Equity. Be sure to list the asset in order of liquidity. Omit the “$” sign in your response.)

SHOWERS COMPANY
Post-Closing Trial Balance
December 31, 2011

The following two events occurred for Tanger Co. on October 31, 2011, the end of its fiscal year.

a.

Tanger rents a building from its owner for $3,300 per month. By a prearrangement, the company delayed paying October’s rent until November 5. On this date, the company paid the rent for both October and November.

b.

Tanger rents space in a building it owns to a tenant for $700 per month. By prearrangement, the tenant delayed paying the October rent until November 8. On this date, the tenant paid the rent for both October and November.

Required:

1.

Prepare adjusting entries that the company must record for these events as of October 31. (Omit the “$” sign in your response.)

Oct.

31   

Assuming Tanger does not use reversing entries, prepare journal entries to record Tanger’s payment of rent on November 5 and the collection of rent on November 8 from Tanger’s tenant. (Omit the “$” sign in your response.)

Nov.

5   

8   

3.

Assuming that the company uses reversing entries, prepare reversing entries on November 1 and the journal entries to record Tanger’s payment of rent on November 5 and the collection of rent on November 8 from Tanger’s tenant. (Omit the “$” sign in your response.)

Nov. 1   

Case A

Case B

Case C

  760

865

1,060  

  Short-term investments

  Current receivables

945

660  

  Inventory

1,900

955

3,800  

  Prepaid expenses

1,200

562

900  

  Total current assets

3,860

3,327

6,920  

  Current liabilities

2,239

1,120

1,730  

Compute the current ratio and acid-test ratio for each of the above separate cases. (Round your answers to 2 decimal places.)

  Acid-test ratio

Which company case is in the best position to meet short-term obligations?

Case A

Case B

Case C

Using your accounting knowledge, find the missing amounts in the following separate income statements athrough e. (Amounts in parentheses do not require a minus sign in front of them. Input all amounts as positive values. Omit the “$” sign in your response.)

Sales

51,200   

36,250

33,280

20,122   

Cost

of goods sold

  Merchandise inventory

(beginning)

4,864   

2,936

6,989

6,124

2,073   

     Total cost of merchandise purchases

29,184   

27,987

7,256   

     Merchandise inventory (ending)

()  

(3,736

(8,489

(5,749

    Cost of goods sold

28,684   

11,241

7,056   

  Gross profit

5,826

38,198

  Expenses

9,000   

10,650

13,050

2,600

6,100   

  Net income (loss)

14,359

(7,224

35,598

1(a)

Prepare entries that the buyer should record for the purchase. (Omit the “$” sign in your response.)

1(b)

Prepare entries that the buyer should record for the cash payment. (Omit the “$” sign in your response.)

2(a)

Prepare entries that the seller should record for the sale. (Omit the “$” sign in your response.)

2(b)

Prepare entries that the seller should record for the cash collection. (Omit the “$” sign in your response.)

Assume that the buyer borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 11% and paid it back on the last day of the credit period. Compute how much the buyer saved by following this strategy. (Use 365 days a year. Round your intermediate calculations and final answer to 2 decimal places. Omit the “$” sign in your response.)

  Buyer’s net savings

The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2011, unadjusted trial balance of Deacon Co., a business owned by Julie Deacon. Use these account balances along with the additional information to journalize (a) adjusting entries and (b) closing entries.

Deacon Co. uses a perpetual inventory system.

32,800  

  Prepaid selling expenses

  J.Deacon, Withdrawals

2,400  

590,400  

  Sales returns and allowances

22,

435

  Sales discounts

6,282  

290,477  

  Sales salaries expense

64,944  

  Utilities expense

18,893  

  Selling expenses

50,774  

  Administrative expenses

130,478  

Additional Information

Accrued sales salaries amount to $1,700. Prepaid selling expenses of $2,400 have expired. A physical count of year-end merchandise inventory shows $32,177 of goods still available.

Using the above account balances and the additional information prepare adjusting entries. (Omit the “$” sign in your response.)

Using the above account balances and the additional information prepare closing entries. (Omit the “$” sign in your response.)

A company reports the following sales related information: Sales (gross) of $109,000; Sales discounts of $2,800; Sales returns and allowances of $8,000; Sales salaries expense of $5,100.

Prepare the net sales portion of the company’s multiple-step income statement. (Input all amounts as positive values. Omit the “$” sign in your response.)

Multiple-Step Income Statement

  Net sales

Chess Company uses LIFO for inventory costing and reports the following financial data. It also recomputed inventory and cost of goods sold using FIFO for comparison purposes.

2010

  LIFO

inventory

290  

240  

  LIFO cost of goods sold

870  

810  

  FIFO

inventory

360  

265

  FIFO cost of goods sold

825  

—  

  Current assets (using LIFO)

350  

320  

170  

150  

Compute its current ratio, inventory turnover, and days’ sales in inventory for 2011 using (a) LIFO numbers and (b) FIFO numbers. (Use 365 days a year. Do not round intermediate calculations and round your final answers to 1 decimal place.)

Inventory
turnover

Days’ sales
in inventory

 times   

 days    

Ringo Company had $940,000 of sales in each of three consecutive years 2010–

2012

, and it purchased merchandise costing $520,000 in each of those years. It also maintained a $240,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of year 2010 that caused its year-end 2010 inventory to appear on its statements as $220,000 rather than the correct $240,000.

Determine the correct amount of the company’s gross profit in each of the years 2010 – 2012. (Omit the “$” sign in your response.)

Prepare comparative income statements to show the effect of this error on the company’s cost of goods sold and gross profit for each of the years 2010−2012. (Input all amounts as positive values. Omit the “$” sign in your response.)

RINGO COMPANY
Comparative Income Statements

Year 2010

Year 2011

Year 2012

Duke Associates, antique dealers, purchased the contents of an estate for $37,600. Terms of the purchase were FOB shipping point, and the cost of transporting the goods to Duke Associates’ warehouse was $1,250. Duke Associates insured the shipment at a cost of $160. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of $500.

Determine the cost of the inventory acquired from the estate. (Omit the “$” sign in your response.)

  Cost of inventory

Harold Co. reported the following current-year purchases and sales data for its only product.

Activities

Units

Acquired at Cost

Units Sold at Retail

Jan.

Beginning inventory

135

 units

 @ $11.40

=

1,539

 @$41.40

Mar.

Purchase

285

 @ $16.40

4,674

July

 @ $21.40

9,309

635

 @ $26.40

16,764

1,490

32,286

565

Assume that ending inventory is made up of 120 units from the March 14 purchase, 170 units from the July 30 purchase, and all 635 units from the October 26 purchase. Using the specific identification method, calculate the following. (Omit the “$” sign in your response.)

 (a) Cost of goods sold

 (b) Gross profit

Ripken Company’s ending inventory includes the following items.

Per Unit

  Product

Market

  Helmets

33     

55   

51    

  Bats

26     

73   

79    

  Shoes

47     

92   

96    

  Uniforms

51     

37   

37    

Compute the lower of cost or market for ending inventory applied separately to each product. (Omit the “$” sign in your response.)

LCM applied
to products

  Total inventory at LCM