Question 3: 7% Points: Required: Prepare Flip’s Supply Co. General Journal Entries For The Following Transactions: Jan. 1 Accepted Flop’s 120 Days, 10% Note, As Settlement Of An Outstanding $15,000 Account Receivable For Goods Sold Last Year Jan. 15 Purc

06 Jul Question 3: 7% Points: Required: Prepare Flip’s Supply Co. General Journal Entries For The Following Transactions: Jan. 1 Accepted Flop’s 120 Days, 10% Note, As Settlement Of An Outstanding $15,000 Account Receivable For Goods Sold Last Year Jan. 15 Purc

On December 1, 2014, Flip Distributing Company had the following account balances. No additional owner investments or withdrawals were made during 2014.

Account	Debit	Account	Credit
Cash	$7,200	Accu. Depn., Equipment	$2,200
Accounts Receivable	4,600	Accounts Payable	4,500
Inventory	12,000	Salaries & Wages Payable	1,000
Supplies	1,200	Owner’s Capital	39,300
Equipment	22,000	Total	$47,000
Total	$47,000

During December, the company completed the following transactions. All end-of-the month adjusting entries were made on November 30, 2014.

Dec. 6	Paid $1,600 for salaries and wages due employees, of which $600 is for December and $1,000 is for November salaries and wages payable.
Dec. 8	Received $1,900 cash from customers in payment of account (no discount allowed).
Dec. 10	Sold merchandise for cash $6,300. The cost of the merchandise sold was $4,100.
Dec. 13	Purchased merchandise on account from Flim Co. $9,000, terms 2/10, n/30.
Dec. 15	Purchased supplies for cash $2,000.
Dec. 18	Sold merchandise on account $12,000, terms 3/10, n/30. The cost of the merchandise sold was $8,000.
Dec. 20	Paid salaries and wages $1,800.
Dec. 23	Paid Flim Co. in full, less discount.
Dec. 27	Received collections in full, less discounts, from customers billed on December 18.

December adjusting entry data:

1. Accrued salaries and wages payable $800.

2. Depreciation $200 per month.

3. Supplies on hand $1,500.

 

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Instructions:

1. Prepare in journal form, without explanations, the December transactions using a perpetual inventory system.
2. Prepare in journal form, without explanations, the December adjusting entries.
3. Prepare a December adjusted trial balance.
4. Prepare a classified balance sheet for year ending December 31, 2014.
5. Prepare in journal form, without explanation, the closing entries for the year ended December 31, 2014.

 

NOTE: Students are encouraged to prepare their own T-accounts, on a separate scratch sheet of paper, and track from the beginning balance thru all journal transactions to ending balances for all accounts used in this problem. Do not turn in your separate scratch sheet of paper – those are student personal working papers and not part of any solution required for this exam.

 

Question 2: 8% points:

The following information is available for Flip Company:

Beginning inventory               600 units at $5

First purchase                          900 units at $6

Second purchase                     500 units at $7.25

 

Assume that Flip uses a periodic inventory system and that there are 700 units left at the end of the month. (Round all final answers to the nearest dollar.)

 

Instructions:

a. Compute the cost of goods available for sale.

b. Compute the value of ending inventory and Cost of Good Sold under the

(1) LIFO method.

(2) FIFO method.

(3) Average-cost method

 

 

Question 3: 7% points:

Required: Prepare Flip’s Supply Co. general journal entries for the following transactions:

Jan. 1	Accepted Flop’s 120 days, 10% note, as settlement of an outstanding $15,000 account receivable for goods sold last year
Jan. 15	Purchased $10,000 Equipment from Floozy, signing a 9 month, 12% note
Jan. 25	Loaned Flam Co. $30,000 cash, accepting a 90 days, 10% note
Jan. 31	Prepared accrual adjusting entry for any interest revenue
Apr. 25	Received payment in full from Flam Co. for outstanding note & interest
May 1	Received payment in full from Flop Co. for outstanding note & interest
Oct. 15	Paid Floozy in full

 

 

 

Question 4: 9% points:

Flip Company purchased a refrigerated delivery truck for $65,000 on April 1, 2016.  The plan is to use the truck for 4 years and then replace it.  At the end of it’s useful life the truck is expected to have a salvage value of $10,000.

 

a. Prepare the depreciation table for Flip’s truck assuming that the company uses the straight-line method for depreciation.

 

b. Prepare the depreciation table for Flip’s truck assuming that the truck was purchased on January 1, 2016 and the company uses the double-declining-balance depreciation method.

 

c. Compute the depreciation expense for 2016 for Flip’s truck assuming the truck has an expected life of 200,000 miles and during 2016 the truck was driven 24,540 miles.  Round your depreciation expense per mile to three decimal places.

 

 

 

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Question 5: 7% points:

Flip earns a salary of $7,500 per month during the year. FICA taxes are 8% on the first $100,000 of gross earnings. Federal unemployment insurance taxes are 6.2% of the first $7,000; however, a credit is allowed equal to the state unemployment insurance taxes of 5.4% on the $7,000. During the year, $25,600 was withheld for federal income taxes and $5,700 was withheld for state income taxes.

 

Instructions

(a)    Prepare a journal entry summarizing the payment of Flip’s total salary during the year.

(b)    Prepare a journal entry summarizing the employer payroll tax expense on Flip’s salary for the year.

(c)    Determine the cost of employing Flip for the year.

 

Question 6: 4% points:

Flip Company at the end of the fiscal 2014 year has the following information: Credit Sales, $2,500,000 Sales Returns & Allowances $25,000 Accounts Receivable $200,000 and Allowance for Doubtful Accounts with a debit o $1,500.

 

Required:

a. Prepare the general journal entry to record the end of the year adjusting entry if Flip uses 0.5% of Net Credit Sales as the basis for determining Bad Debt Expense.

b. Prepare the general journal entry to record the end of the year adjusting entry if Flip uses 5% of Accounts Receivable as the basis for determining Bad Debt Expense.