PROBLEM 5-1 Computation of Sales
Accounts receivable/ Notes Receivable Trade/ Advances from Customers
Beg. Balance - AR
Beg. Balance - NR
Balance End - Advances
Sales on Account
Recoveries
Total
200,000
240,000
40,000
533,000
1,000
180,000
170,000
55,000
4,000
2,000
600,000
3,000
1,014,000
1,014,000
Balance End - AR
Balance End - NR
Beg. Balance - Advances
Sales Ret. and Allowance
Sales Discounts
Collections including recoveries
Write-off
Suggested Answer: C
PROBLEM 5-2 Computation of Bad Debts
Allowance for Bad Debts
Ending balance
Write-off
40,000
8,000
25,000 Beginning balance
21,000 Bad debts expense
2,000 Recoveries
Total
48,000
48,000
Suggested Answer: C
PROBLEM 5-3 Computation of Purchases
Accounts Payable/ Notes Payable/ Advances to Supplies
Payments
Purchase Ret. And Allow.
Purchase Discount
Beg. Balance - Advances
Balance end - AP
Balance end - NP
Total
800,000
6,000
3,000
50,000
250,000
210,000
200,000
400,000
68,000
651,000
1,319,000
1,319,000
Beg. Balance - AP
Beg. Balance - NP
Balance end - Advances
Purchases (gross)
Suggested Answer: A
PROBLEM 5-4 Computation of Cost of Sales
Accounts Payable (AP)/ Notes Payable (NP)
Payments
Purchase Ret. and Allow.
Purchase discount
Balance end - AP
800,000
4,000
3,000
250,000
200,000 Beg. Balance - AP
Beg. Balance - NP
857,000 Purchases (gross)
Balance end - NP
-
Total
1,057,000
1,057,000
Merchandise Inventory
Beginning balance
Net Purchases
400,000
858,000
Total
1,258,000
210,000 Ending balance
1,048,000 Cost of sales
1,258,000
Computation of net purchases:
Gross purchases on account
Add cash purchases
Total
Less: Purchase returns and allowances
Purchase discount
Net purchases
857,000
10,000
867,000
6,000
3,000
858,000
Suggested Answer: C
PROBLEM 5-5 Computation of Income Other than Sales
Rent Receivable/ Unearned Rent Income
Beg. Balance - Rent
Receivable
Balance end - Unearned Rent
income
Rent income
Total
200,000
250,000 Balance end - Rent Receivable
30,000
90,000 Beg. Balance - Unearned Rent
Income
550,000 Collections (squeeze)
890,000
660,000
890,000
Suggested Answer: B
PROBLEM 5-6 Computation of Expenses in General
Prepaid Rent/ Rent Payable
Beg. Balance - Prepaid
Salaries
Balance end - Accrued
Salaries
Payments
Total
200,000
250,000 Balance end - Prepaid Rent
65,000
915,000
80,000 Beg. Balance - Rent Payable
850,000 Rent Expense
1,180,000
1,180,000
Suggested Answer: D
PROBLEM 5-7 Computation of Cost of Machine Acquired and Sold
Question No. 1
(D)
Carrying amount of equipment sold
Add: Accumulated depreciation
25,000
15,000
Cost
Question No. 2
40,000
(A)
Equipment
Beg. Balance
Cost of PPE acquired
(squeeze)
100,000
Total
160,000
60,000
120,000 Balance end
Cost of PPE disposed
40,000
160,000
Accumulated Depreciation
Balance end
Accumulated depreciaion of
PPE disposed
18,000
15,000
15,000 Beg. Balance
18,000 Depreciation expense
Total
33,000
33,000
PROBLEM 5-13
Question No. 1
(A)
Accounts receivable trade
Beg. Balance
Sales on account (squeeze)
124,000
1,535,000
146,000 Balance end
13,000 Sales discount
1,500,000 Collections
Total
1,659,000
1,659,000
Sales on account
Add: Cash sales
Total sales
1,535,000
160,000
1,695,000
Question No. 2
Gross sales (see No.1)
Less: Sales discount
Net Sales
( C)
Question No. 3
(D)
1,695,000
13,000
1,682,000
Accounts Payable
Payments
Balance end
1,206,000
410,000
382,000
1,234,000
Total
1,616,000
1,616,000
Purchases on account
Add: Cash purchases
Total Purchases
Question No. 4
1,234,000
120,000
1,354,000
(A)
Beg. Balance
Purchases (squeeze)
Merchandise Inventory
Beg. Balance
Net. Purchases
186,000
1,354,000
190,000 Balance end
1,350,000 Cost of sales (squeeze)
Total
1,540,000
1,540,000
Question No. 5
(B)
Prepaid G&A / Accrued G&A
Beg. Balance - Prepaid
Interest
9,600
8,400 Balance end - Prepaid Interest
Balance end - Accrued
Interest
9,000
7,000 Beg. Balance - Accrued interest
Payments
204,000
222,600
Total
207,200 Expenses
222,600
Question No. 6
(A)
General and administrative expense (see. No. 5)
Depreciation expense
Warranty expense
Total operating expense
Question No. 7
Selling price of land
Less: Book value of land
Gain on sale of land
207,200
84,000
6,400
297,600
(A)
Question No. 8
( C)
Selling price
Less book value
Cost
Less: Accumulated depreciation
Gain on sale of warehouse equipment
Question No. 9
Selling price
Less: Book value
Cost
Less: Accumulated depreciation
Gain on sale of boiler
Question No. 10
Net Sales
Less: Cost of sales
Gross profit
Less: Operating expenses
Gain on sale (14,000 +3,000+4,000)
Net income
20,000
16,000
4,000
12,000
25,000
16,000
9,000
3,000
42,000
48,000
20,000
28,000
14,000
1,682,000
1,350,000
332,000
297,600
21,000
55,400