Reference no: EM13679885
. The accounting staff at Moonbeam Enterprises prepares monthly financial statements. At the end of April 2010 the company had the following account balances:
Land $45,000
Notes payable $33,000
Merchandise inventory $12,480
Buildings $50,000
Cash $10,360
Contributed capital $38,770
Retained earnings, April $46,070
Cost of goods sold $15,050
Sales revenue $26,000
Supplies expense $1,300
Income tax expense $1,060
Wage expense $1,500
Insurance expense $550
Interest expense $900
Required
Prepare an income statement and balance sheet in good form. For each statement, use a three-line heading on the statement that includes:(a) the name of the company, (b) the name of the statement, (c)the appropriate time period or date.
2. Indicate the effects of the following transactions on the balance sheet equation, using the format:
Transaction Assets = Liabilities + Shareholders' equity
a. Issued 20,000 shares of $0.10 par value common stock for $100,000.
b. Acquired equipment costing $7,500 for a cash payment of $700 with the balance payable over the next five years.
c. Paid $1,000 for rent for the next two months.
d. Completed a consulting job and invoiced the client for $5,000, payable in 30 days.
e. Ordered office supplies for the office, totaling $225.
f. Purchased a three-year fire insurance policy and pays in advance $3,000.
g. Received payment from the client for services rendered in (d) above.
3. The following data was obtained from the inventory records of Jeffrey Company for the month of June:
June 1 Beginning inventory 2,000 units @ $2 each
June 10 Purchased 1,000 units @ $3 each June 14 Purchased 300 units @ $4 each
June 20 Purchased 500 units @ $5 each
June 30 Sold 2,200 units
Instructions:
Calculate the costs of goods on June 30, using
a. LIFO valuation method
b. FIFO valuation method
c. Weighted average valuation method
4. Best Products uses the balance sheet approach to estimate uncollectible accounts expense. At year-end an aging of the account receivable produced the following classifications:
Not Yet Due $80,000
1 - 30 days past due $32,000
31 - 60 days past due $10,000
61 - 90 days past due $12,000
Over 90 days $3,000
Total $137,000
On the basis of past experience, the company estimated the percentages probably uncollectible for the above five age groups to be as follows: Group 1, 1%; Group 2, 3%; Group 3,10%; Group 4; 20%; and Group 5, 50%. The Allowance for Doubtful Accounts showed a balance of $2,200.
Instructions:
a. Calculate the total estimated amount of uncollectible debts based on the above classification by age group.
b. Determine amount needed to increase the Allowance for Doubtful Accounts to the proper amount.