Exam 2

Question 1

Factoring receivables set up (seller)

Answer 1

cash
loss on sale of receivables
due from factor 
 ...........Recourse liability 
 ............Accounts Receivable

Question 2

Factoring receivables set up (buyer)

Answer 2

A/R
…………Gain on sale of receivables
…………Due to customer
…………Cash

Question 3

Factoring receivables- Collect 8,000 to satisfy $8,200 (seller)

Answer 3

Loss on sale of receivable 200

………….due from factor 200

Question 4

Factoring receivables- Collect 8,000 to satisfy $8,200 (buyer)

Answer 4

Cash 8000
Due to customer 200
………A/R 8200

Question 5

Factoring receivables- deem 110 uncollectible (seller)

Answer 5

Recourse liability 110

…….Cash 110

Question 6

Factoring receivables- deem 110 uncollectible (buyer)

Answer 6

Cash 110

…..A/R 110

Question 7

Factoring receivables- settle liabilities and close out accounts (buyer)

Answer 7

PAY REST OF DUE FROM FACTOR:
Due to customer
……Cash

Question 8

Factoring receivables- settle liabilities and close out accounts (seller)

Answer 8

CLOSE OUT ESTIMATED RL:

Recourse Liabilities (Original #-$ deemed uncollect)
........Loss on sale of rec

GET REST OF DUE FROM FACTOR:

Cash (original amount-before)
…….Due from factor

Question 9

Sales on credit–Net Method– (seller) 1/1

Answer 9

A/R ($ x.97)
…….Sales Rev

COGS
……..Inventory

Question 10

Returned items on credit (seller) —-Net Method

Answer 10

Sales Returns/allowance $ x.97
……A/R

Returned Inventory
…..COGS

Question 11

(Net method) Customer pays for the inventory (that was on credit) inside discount period for 1000$ (seller)

Answer 11

Cash 1,000

…..A/R 1,000

Question 12

(Net method) end of the discount period for inventory items on credit being sold (seller) —not all inventory paid for yet—

Answer 12

A/R

………….Discount forfeited from sale (1990-200-98/.98-#)

Question 13

(Net method) Customer pays your the rest of $$ for inventory outside of the discount period

Answer 13

Cash

…… A/R (Sales rev adj - returns adj- cash paid + forefeited$)

Question 14

Selling notes receivable premium (seller) 1/1

Answer 14

Notes Receivable (given amount)
Premium on N/R xxx
…….Cash (Single + Annuity)

Question 15

Selling notes receivable premium (seller) adjusting

Answer 15

Cash (interest payment–annuity on chart)
……Premium on N/R xx
……Interest Rev (Single + Annuity xMR)

Question 16

Selling notes receivable close out

Answer 16

Cash (initial amount)

……N/R

Question 17

Selling notes receivable (zero interest bearing) 1/1

Answer 17

Notes Receivable (given amount)
…….Discount on N/R xxx
…….Cash (Single + NO Annuity)

Question 18

Selling notes receivable (zero interest bearing) ADJ

Answer 18

Discount on N/R
…….Interest Rev (Single + NO Annuity x MR)

*** Note.. no cash payment

Question 19

Selling notes receivable with change in % (ADJ)
— Original BV + discount < New BV

Remember: NEW BV use less PERIODS AND different %

Answer 19

old adj journal:

Cash
Discount on notes rec
….. Interest rev

AND:
Fair value Adj.
…. gain on unrealized holding

Question 20

Selling notes receivable with change in % (ADJ)
— Original BV + discount > New BV

Remember: NEW BV use less PERIODS AND different %

Answer 20

old adj journal:

Cash
Discount on notes rec
….. Interest rev

AND:
Loss on unrealized holding
…..Fair value Adj.

Question 21

Repurchase Agreement… what do you do first???

Answer 21

Solve for imputed interest

Question 22

Repurchase Agreement: initial sale (seller)

Answer 22

Cash $$amount

…….Liability to _____

Question 23

Repurchase Agreement- 1st Adj journal at end of period

Answer 23

Interest expense. (initial $ amount x imputed interest)

….liability to ____

Question 24

Repurchase Agreement- 2st Adj journal at end of period

Answer 24

Interest expense. ($ amount + 1st interest expense x imputed interest)
….liability to ____

Question 25

Repurchase Agreement- Buy back with cash at end of period

Answer 25

``` Interest expense ($+ 1st interest expense x interest) ....liability to ____ ``` Liability to _____ (ending amount) .......Cash

Question 26

sale on consignment (consignee) | -item shipped and seller pays for shipping for 2500$

Answer 26

none

Question 27

sale on consignment (consignor) | -$30,000 in ivenotry shipped and seller pays for shipping for 2500$ in cash

Answer 27

Inventory- consigned 30,000 ....Finished goods inventory Inventory- consigned 2500 ....cash 2500

Question 28

sale on consignment (consignee) | -1/30 consignee pays for advertizing (4,000) and will be reimbursed but doesn't let business know until later

Answer 28

Advertizing receivable 400 | ..... cash

Question 29

sale on consignment (consignor) | -1/30 consignee pays for advertizing (4,000) an will be reimbursed but doesn't let business know until later

Answer 29

NONE

Question 30

sale on consignment (consignee) (15% com)(Adv rec) - consignee sells $2500 of merch and notifies the business - remits cash

Answer 30

Cash 25000 (1st) ....Commission rev. 37500 ....Adv. Receivable 4000 ....Payable to ____ xxx-last -------------------------------------------------------------------- Payable to _____ ..... Cash

Question 31

sale on consignment (consignor) (15% com)(Adv rec) - consignee sells $2500 of merch and notifies the business - remits cash

Answer 31

Cash XXX (last) Adv. Exp 4,000 Commission Exp. 3750 .......Sales revenue for consigned goods 25,000 (FIRST) -------------------------------------------------------------------- COGs (COST OF inv + shipping/ % of goods sold) .......Inventory Consigned

Question 32

Inventory with warranty (seller) 1 yr of assurance warranty: estimated at 1,000 2 yrs of extended warranty: 2,000$ COGS=17,000 Selling price= 30,000 -sale of inventory (1/1) for cash

Answer 32

Cash 32,000 ....sales rev 30,000 ....Unearned ext. warranty rev. 2,000 COGS 17,000 ....Inventory 17,000

Question 33

Inventory with warranty (seller) 1 yr of assurance warranty: estimated at 1,000 2 yrs of extended warranty: 2,000$ COGS=17,000 Selling price= 30,000 ----end of year adj. 12/31

Answer 33

Warranty expense 1,000 | .....Warranty liability 1,000

Question 34

Inventory with warranty (seller) 1 yr of assurance warranty: estimated at 1,000 2 yrs of extended warranty: 2,000$ COGS=17,000 Selling price= 30,000 -Customer doesn't use extended warranty 2 months after end of assurance

Answer 34

2,000/24 months= 83.33 x 2 months = # Unearned extended warranty rev. # ..... Ext. warranty rev.

Question 35

Contract Asset (seller) 11/1 enter into contract

Answer 35

NONE

Question 36

Contract Asset (seller) Provide 1/2 items

Answer 36

Contract Asset- shoes ($ value) .... Sales Rev. COGS ......Inventory

Question 37

Contract Asset (seller) Provide 2nd of 2 items but not paid until a week from now

Answer 37

Accounts Receivable ...... Contract Asset (price) ..... Sales rev- 2nd item (price2) COGS (item 2 cost) ....Inventory- item 2

Question 38

Contract Asset (seller) seller is paid for both goods from previous delivery

Answer 38

Cash | .....accounts receivable

Question 39

buying inventory on credit - perputual - period

Answer 39

Perpetual: Inventory ...accounts payable Periodic: Purchases ...accounts payable

Question 40

returning inventory on credit - perputual - period

Answer 40

Perpetual: Accounts Payable ....inventory Periodic: Accounts Payable ....Purchase Returns

Question 41

_____ + LIFO reserve = _____

Answer 41

FIFO inv. + LIFO reserve = LIFO inv.

Question 42

LIFO COGs (same/opposite sign) change in LIFO reserve. = ending COGS

Answer 42

Same

Question 43

FIFO COGS (same/opposite sign) change in LIFO reserve

Answer 43

Opposite

Question 44

Lower of cost or Net Realizable Value | —COGS Method Journal entry

Answer 44

COGS | ......Allowance to reduce inv. To NRV

Question 45

Lower of cost or Net Realizable Value | —loss method Journal entry

Answer 45

Loss due to LCNRV adj. | .....Allowance to reduce inv. To NRV

Question 46

Lower of cost or designated market | -—COGS Method Journal entry

Answer 46

COGS | ....Allowance to reduce inv. to market

Question 47

Lower of cost or designated market | -—loss method Journal entry

Answer 47

loss due to decline of inv. To market | ....Allowance to reduce inv. To market

Question 48

Estimated cash returns of $100

Answer 48

Sales returns/allowance ......Accounts payable Estimated returned inventory .....COGS

Question 49

Estimated credit returns of $100

Answer 49

Sales returns/allowance ......Allowance for sales returns/allowance Estimated returned inventory .....COGS

Question 50

Actual credit returns

Answer 50

Sales returns/allowance .....A/R Returned inventory ....COGS