Reference no: EM131152849

Consider Each Part Independently

Part I-Inventory Cutoff
Only merchandise shipped by the Namtip to customers up to and including on December 30, 2015, has been eliminated from its inventory in its accounting records. The annual physical inventory count was taken on December 30, 2015 after the close of business has been recorded on the books by the company's controller. No perpetual inventory records for finished goods are maintained. Al sales are made on an FOB-shipping point basis. You are to assume that all purchase invoices have been correctly recorded.

The following lists of sales invoices are entered in the sales journal for the last part of December 2015 and first part of january 2016, respectfully.

Sale	Sales Invoice Amount	Sales Invoice Date	Cost of Merchandise Sold	Date Shipped
December 2015
	5          3.000	Dec 21	$ 2.000	Dec 31
Et	2,000	Dec 31	800	Dec 13
C	1,000	Dec 29	600	Dec 30
C	4,000	Dec 31	2.400	Jan 9
	10,000	Dec 30	5.600	Dec 29'
January 2016
	6.000	Dec 31	4.000	Dec 30
	4,000	Jan 2	2.300	Jan 2
H	8.000	Jan 3	5.500	Dec 31

'sent to a consignee

Prepare the necessary proposed adjusting journal entry, in proper form. for each of the Sales (A through H). If no adjusting journal entry is necessary, you should write NO ADJUSTING ENTRY NEEDED in the space for that sale.

Part II-Inventory Costing (Pricing)

Now you are performing costing 'pricing) tests on a sample of the ending inventory. One of the items you selected for cost (price) testing is the orange widget, a significant part n the manufacture of Namtip's main products. You noted that the 12131/15 inventory record of the orange widgets consisted of 1,263 units (you previously verified that this agreed to the quantity indicated from the physical inventory) at $782 each for a total of 5987.666.

Part II A. When you look at the invoices for the November and December purchases of the orange widgets,you see the following.

Date	Quantity	Unit Price	Total
11003/15	1.00D	$765	$ 765.000
11/22/V		770	385.000
12003/15		777	621.600
12128/15	600	782	489200

Prepare the adjusting entry, in proper form, for the proper cost of orange widgets at December 31, 2015. assuming Namtip Ltd. uses the periodic FIFO method of inventory_ Show supporting calculations as necessary.

Part II B-Ignore part A above.

Assume you determined that the net realizable value for an orange widget is $775 per unit, while the net realizable value less a normal margin is $745 per unit.

Prepare the adjusting entry, in proper form, for the proper presentation of orange widgets at December 31, 2015 assuming you examined a vendor invoice dated December 31 2015 for 500 orange widgets at $750 each for a total of $375.000. The units were ordered on December 28. 2015 and received on January 4, 2016_ Show supporting calculations as necessary.

Part Ill- Accounts Receivable-Allowance for Doubtful Accounts
Another area you ray.z- teen assigned on the auc t is Accounts Receivable-more specisically the Allowance for Doubtful Accounts. You performed the followng analysis for the Allowance for Doubtful Accounts:

Description                                           Amount            Tick Mark
Beginning Balance                                  $ 154,000          £
Increase (2% of S10,000.000 credt sales:  200,000            √
Write offs                                             (95,000)           Φ
Recovery of previously written off accourts 15.000             €
Ending Balance                                       $274.000         µ¥

Tick Mark Legend:
•£ Traced to pror year's audit documentation.

•√ Calculated.

•Φ Reviewed authonzation memorandum from the Treasurer_

•€ Traced to cash recepts and reviewed supportng documentation

•µ Footed.

•¥ Traced to the 12./31/15 general ledger.

After several discussions with Namtip's controller, it has was determined that Na'ntip should adopt the aging method for estimating the A-owance for Doubtful Accounts.

A summary of the agng is as follows:
Estimated %
Classification by Month of Sale       Balance        Estimated % Uncollectible
November-December 2015             $ 1,080 000   2%
July-October 2015                        650.000        10%
January-June 2015                       420.000         25%
Prior years"                                150,000          70%
Total                                        $ 2,300,000

'$80,000 of the balance is totally uncdlectble and should be written off prior to the yearend adjustment

Prepare the proposed necessary acijustng journal entries, in proper form, to ensure that the Allowance for Uncollectble Accounts is in accordance with generally accepted accounting principles as of December 31. 2015. Show supporting calculations as necessary.Part IV Plant, Property and Equipment
The accompanying analyses of the Property, Plant, and Equipment and related Accumulated Depreciation accounts have been prepared by the chief accountant c' the Namtip. You have traced the beginning balances to your prior year's audit wort ing papers.

All plant assets are depreciated on the straight-line basis (no residual value taken into consideration) based on the following estimated service building. 25 years; and all other items, 10 year.  The company's policy is to take one half-year's depreciation on all asset additions and disposals during the year.

Your audit revealed the following information:
1. On April 1, the company entered into a 10-year lease contract for a the casting machine, with annual payments of $5.000 payable in advance every April 1_ The lease is cancelable by either party (60 days' written notice s required), and there is no option to renew the lease or buy the equipment at the end of the lease. The estimated service life of the machine is 20 years with no residual value. The company recorded the die castng machine in the Machinery and Equipment account at $40,400, the present value at the date of the lease, and $2.020 applicable to the machine has been included in depreciation expense for the year.

2. The company completed the construction of a wing on the plant building on June 30_ The service life of the building was not extended by this addition. The lowest construction bid received was $17,500, the amount recorded in the Buildings account Company personnel constructed the addition at a cost of $16,000 (materials, $7,500; labor. $5,500; and overhead, $3,000).

3. On August 18. $5_000 was paid for paving and fencing a portion of land owned by the company and used as a parking lot for employees_ The expenditure was charged to the Land account.

4. The amount shown in the machinery and equipment asset retirement column represents cash received on September 5 upon disposal of a machine purchased in July 2011 for $48,000_ The chief accountant recorded depreciation expense of $3,500 on this machine in 2015.

5. Harbor City donated land and a building appraised at $100,000 and $400,000, respectively. to Namtip. Ltd. for a plant On September 1, the company began operating the plant. Since no costs were involved. the chief accountant made no entry for the above transaction.
Prepare the adjustng journal entries, in proper form, that you would propose at December 31. 2015, to adjust the accounts for each the above transactions (1-5)_ Disregard income tax implications_ The accounts have not been closed. Computations should be rounded off to the nearest dollar_ If no adjustng journal entry is necessary, you should write NO ADJUSTING ENTRY NEEDED in the appropriate space.

Show supporting calculations as necessary