2024 – Question 1 Knowledge test Introduction to Inventory a Spencer Sporting Goods
ACCT 301 HW 3 SECTION 4510 FALL 2015 – 2024
Question 1 – (Knowledge test – Introduction to Inventory)
a. Spencer Sporting Goods Company engaged in the following transactions in April
2010:
Apr. 1 Sold merchandise on account for USD 288,000; terms 2/10, n/30, FOB shipping point,
freight collect.
Apr. 5 USD 43,200 of the goods sold on account on April 1 were returned for a full credit.
Payment for these goods had not yet been received.
Apr.8 A sales allowance of USD 5,760 was granted on the merchandise sold on April 1 because
the merchandise was damaged in shipment.
Apr.10 Payment was received for the net amount due from the sale of April 1.
b. High Stereo Company engaged in the following transactions in July 2010.
July 2 Purchased stereo merchandise on account at a cost of USD 43,200; terms 2/10, n/30,
FOB destination, freight prepaid.
July 15 Sold merchandise for USD 64,800, terms 2/10, n/30, FOB destination, freight prepaid.
July 16 Paid freight costs on the merchandise sold, USD 2,160.
July 20 High Stereo Company was granted an allowance of USD 2,880 on the purchase of July 2
because of damaged merchandise.
July 31 Paid the amount due on the purchase of July 2.
Requirements:
Prepare journal entries to record the transactions.
Chapter 9
Question 2: (Knowledge Test – Receivables and Payables)
As of 2009 December 31, Fargo Company’s accounts prior to
adjustment show:
Allowance for uncollectible accounts (credit balance)
Accounts receivable $ 40,000
Allowance for uncollectible accounts (credit balance) 750
Sales 250,000
Fargo Company estimates uncollectible accounts at 1 percent of sales.
On 2010 February 23, the account of Dan Hall in the amount of USD 300 was
considered uncollectible and written off. On 2010 August 12, Hall remitted USD 200
and indicated that he intends to pay the balance due as soon as possible. By 2010
December 31, no further remittance had been received from Hall and no further
remittance was expected.
Requirements:
a. Prepare journal entries to record all of these transactions and adjusting entries.
b. Give the entry necessary as of 2009 December 31, if Fargo Company estimated its
uncollectible accounts at 8 percent of outstanding receivables rather than at 1 percent
of sales.
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