Quiz #2 Study Guide

During 2012, Geile Corp had 12,000 left on hand at year end. The following units were on hand to start or
purchased during the year:
Units Cost per
unit
Total Cost
Beginning inventory 5,000 2.50 12,500
Purchase 2/2/12 8,000 3.25 26,000
Purchase 6/15/12 6,000 4.10 24,600
Purchase 10/30/12 7,000 4.55 31,850
Total available
Less Sold
Ending Inventory


Required: Fill in the number of units sold in the above table and calculate the number of units in Ending
Inventory. Calculate cost of goods sold and ending inventory for the next 3 questions.

1. If the company used the LIFO method, what is the value of ending inventory and cost of goods sold?
Cost of Goods Sold Ending Inventory







2. If the company used the FIFO method, what is the value of ending inventory and cost of goods sold?
Cost of Goods Sold Ending Inventory







3. If the company used the average cost method, what is the value of ending inventory and cost of goods
sold?
Please round your calculated average cost per unit to 2 decimals (example - $18.79)
Average Cost per unit = _____________________

Cost of Goods Sold Ending Inventory

4. Grace Company completed its inventory count with a total inventory value of $300,000. Given the
information listed below, what are the necessary adjustments?
a) Grace included in the inventory goods held on consignment for Falls Co., costing $15,000.
b) The company did not include in the count purchased goods of $10,000, which were in transit
(terms: FOB shipping point).
c) The company did not include in the count inventory that had been sold with a cost of $12,000,
which was in transit (terms: FOB shipping point).

What is the corrected inventory value after the required adjustments from above?


5. Identify Lower of cost or Market

Merchandise Cost Market
Diamond Necklace 10,000 9,000
Diamond Earrings 5,000 6,500
Diamond Bracelet 11,000 10,500

What is this inventory valued at on the balance sheet?


6. At the end of 2012, Gatlin Incs controller estimates 2% of $240,000 in Accounts Receivable will be
uncollectible. Write the journal entry to record Bad Debt Expense for the period if the Allowance for
Uncollectible Accounts has a debit balance of $2,000 before this adjustment entry is posted:

12/31/12


7. What is net Accounts Receivable reported in balance sheet as of Dec. 31, 2012?



8. Assume that during 2013, a total of $2,000 Accounts Receivable has to be written off due to customers
inability to pay what they owe Gatlin Inc. What journal entry would be used to record this write-off of
$2,000?

12/31/13


What is net Accounts Receivable reported in balance sheet after the write off?


9. On August 1, 2012, Gage Industries lends $15,000 to Stone Company for 9 months. The Note Receivable
is established with a 5% annual interest rate, and the terms of the note states that the principal and interest
will be due and paid on April 1, 2013. What adjusting journal entry is needed to accrue interest revenue
earned for 2012 before Gage Industries prepares financial statements on December 31, 2012?

12/31/2012



10. On May 1, 2013, Stone Company pays all principal and interest owed to Gage Industries. Write the journal
entry (from the viewpoint of Gage Industries) to record the collection.

05/01/2013