UNIVERSITY OF GUYANA

SCHOOL OF ENTREPRENEURSHIP AND BUSINESS INNOVATION

DEPARTMENT OF ACCOUNTING & FINANCE
WORKSHEET IV- ACT2100 – FINANCIAL ACCOUNTING 1

1. Rudolf Diesel Company's inventory records show the following data:

Units Unit Cost
Inventory, January 1 5,000 $9.00
Purchases: June 18 4,500 8.00
November 8 3,000 7.00
A physical inventory on December 31 shows 3,000 units on hand. Under the FIFO
method, the December 31 inventory is? 3000 X $7.00 =$21,000.

2. A Company's goods in transit at December 31 include:

sales made purchases made

(1) FOB destination (3) FOB destination

(2) FOB shipping point (4) FOB shipping point

Which items should be included in the company’s inventory at December 31?

Data for Q 3-4: Jergens had 500 units on hand at January 1, costing $18 each. Purchases and sales during the month of
January were as follows:
Date Purchases Sales
Jan. 14 375 @ $28
17 250 @ $20
25 250 @ $22
29 250 @ $32
Jergens does not maintain perpetual inventory records. According to a physical count, 375 units were on hand at
January 31.

3. Compute the cost of the inventory at January 31, using the FIFO method (125x20)+(250X22)=$8000

4. Compute The cost of the inventory at January 31, under the LIFO method is:(250X20)+(125X18)= $7250

5. At May 1, 2013, Dutch Company had beginning inventory consisting of 100 units with a unit cost of $7. During May,
the company purchased inventory as follows:
200 units at $7
300 units at $8
The company sold 500 units during the month for $12 per unit. Dutch uses the average cost method. Compute Dutch’s
gross profit for the month of May. $2,250

6. Graham Company uses a periodic inventory system. Details for the inventory account for
the month of January, 2020 are as follows:

An end of the month (1/31/20) inventory showed that 120 units were on hand. How many
units did the company sell during January, 2020? 280 UNITS

Data For Q 7-8: Holliday Company's inventory records show the following data:

A physical inventory on December 31 shows 2,000 units on hand. Holliday sells the units for $12 each. The company
has an effective tax rate of 20%. Holliday uses the periodic
inventory method.
 WORKSHEET IV- ACT2100 – FINANCIAL ACCOUNTING 1
7. The weighted-average cost per unit is? $8.16
8. If the company uses FIFO, what is the gross profit for the period? $38,000

9. The following information is available for Park Company at December 31, 2010: beginning inventory $80,000; ending
inventory $120,000; cost of goods sold $900,000; and sales $1,200,000. Park’s inventory turnover in 2010 is?
$900,000÷($80,000+$120,000)= 9
2
The following information was available for Q 9-10 for Hoover Company at December 31, 2010: beginning inventory
$90,000; ending inventory $70,000; cost of goods sold $660,000; and sales $900,000.

10. Hoover’s inventory turnover ratio in 2022 was? 8.25 times

11. Hoover’s days in inventory in 2010 was? 44.24 days

12. The Entertainment Center accumulates the following cost and market data at December 31.

What is the lower-of-cost-or-market value of the inventory?$10,200+$8000+$12,000=$30,200.

13. An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the
ending inventory. The effect of this error in the current period is on COGS and Net Income are? COGS will be
understated and Net Income Overstated
14. A company uses the periodic inventory method and the beginning inventory is overstated by $4,000 because the
ending inventory in the previous period was overstated by $4,000.The amounts reflected in the current end of the
period balance sheet for Assets and Equity are? Overstated Assets, Overstated Equity

Data for Q 15-16 Hoyt Company's inventory records show the following data for the month of September:

A physical inventory on September 30 shows 200 units on hand.

15. Calculate the value of ending inventory and cost of goods sold if the company uses FIFO inventory costing and a
periodic inventory system.
Value of ending inventory 200x$3.70=$740; cost of goods sold 100x$3.00+450x$3.50+100x$3.70=$2,245.

16. Calculate the value of ending inventory and cost of goods sold if the company uses LIFO inventory costing and a
periodic inventory system. Value of ending inventory 100x$3.50+100x$3.00=$650;
cost of goods sold 300x$3.70+350x$3.50=$2,335

17. The XYZ manufacturing company has the following balances in its trial balance at the year end:
$000
Direct Labour 450
Direct Materials 1500
Direct Cost 150
Factory overheads 236
Work in progress at start of year 126
Selling overheads 56
Bank interest 89
In addition, work in progress at the end of the year is valued at $267 000.
Which is the correct figure for the Prime Cost? (Direct Materials +Direct Labour+Direct Cost)$2,100,000
18. Most companies pay current liabilities out of? Cash assets or any assets that can be converted to cash
19. Which current liability is usually not an accrued liability?Unearned revenue
20. Admire County Bank agrees to lend Givens Brick Company $200,000 on January Givens Brick Company signs a
$200,000, 8%, 9-month note. The entry made by Givens Brick Company on January 1 to record the proceeds and
issuance of the note is?
Jan 1 Cash 200,000
Notes Payable 200,000

21. On September 1, Joe's Painting Service borrows $50,000 from National Bank on a 4-month, $50,000, 6% note. The
entry by Joe's Painting Service to record payment of the
note and accrued interest on January 1 is
Jan 1 Note payable 50,000
Interest payable 1,000
(50,000x6%x4/12)
Cash 51,000
 UNIVERSITY OF GUYANA
FACULTY OF SOCIAL SCIENCES
DEPARTMENT OF BUSINESS & MANAGEMENT STUDIES
WORKSHEET IV- ACT2100 – FINANCIAL ACCOUNTING 1

22. The interest charged on a $100,000 note payable, at the rate of 6%, on a 60-day note
would be? $100,000x6%x60/360 =$1000

23. Reliable Insurance Company collected a premium of $15,000 for a 1-year insurance policy on May 1. What amount
should Reliable report as a current liability for Unearned Insurance Premiums at December 31? $15,000-
($15,000x8/12)=$5,000
24. A retail store credited the Sales account for the sales price and the amount of sales tax on sales. If the sales tax rate is
5% and the balance in the Sales account amounted to
$315,000, what is the amount of the sales taxes owed to the taxing agency?
$315,000-(315,000/1.05(100%+5%))=$15,000

25. A cash register tape shows cash sales of $1,500 and sales taxes of $120. The journal
entry to record this information is? Cash $1,620
Sales revenue $1,500
Sales tax payable 120

26. Hilton Company issued a four-year interest-bearing note payable for $300,000 on January 1, 2009. Each January the
company is required to pay $75,000 on the note. How will this note be reported on the December 31, 2010 balance
sheet? Notes Payable $225,000
27. Hardy Company has current assets of $90,000, current liabilities of $100,000, long-term,
assets of $180,000 and long-term liabilities of $80,000. Hardy Company's working capital is -$10,000 and its
current ratio are:0.9:1

28. If a liability is dependent on a future event, it is called a? Contingent liability

29. Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are
$10,000. If the balance of the Allowance for Doubtful Accounts is $2,000 credit before adjustment, what is the amount
of bad debts expense for that period? $10,000-$2,000=$8,000

30. Using the percentage of receivables method for recording bad debts expense, estimated uncollectible
accounts are $10,000. If the balance of the Allowance for Doubtful Accounts is $2,000 debit before adjustment,
what is the balance after adjustment? $10,000 + $2,000=$12,000

31. Using the allowance method, the uncollectible accounts for the year is estimated to be $28,000. If the balance for the
Allowance for Doubtful Accounts is a $7,000 credit before adjustment, what is the amount of bad debts expense for
the period? $28,000-$7,000=$21,000

32. Using the allowance method, the uncollectible accounts for the year is estimated to be $28,000. If the balance for the
Allowance for Doubtful Accounts is a $7,000 debit before adjustment, what is the amount of bad debts expense for the
period? $28,000+$7,000 = $35,000

33. Longbine Company’s ledger at the end of the current year shows Accounts Receivable of $150,000.
Instructions
If Allowance for Doubtful Accounts has a credit balance of $3,000 in the trial balance and bad debts are expected
to be 10% of accounts receivable, journalize the adjusting entry for the end of the period. a)

Bad Debt expense $12,000

To Allowance for Doubtful Account $12,000
[ ($150,000x10%) - $3,000]

b. If Allowance for Doubtful Accounts has a debit balance of $3,000 in the trial balance and bad debts are expected
to be 10% of accounts receivable, journalize the adjusting entry for the end of the period.

Bad Debt expense $18,000

To Allowance for Doubtful Account $18,000
[ ($150,000x10%) + $3,000]

34. Determine the interest on the following notes:

(a) $2,000 at 6% for 90 days. 30 (2000x6%x90/360)
(b) $900 at 9% for 5 months. 33.75 (900x9%x5/12)
(c) $3,000 at 8% for 60 days. 40 (3000x8%x60x360)
(d) $1,600 at 7% for 6 months 56 (1600x7%x6x12)

35. Flint Distributors has the following transactions related to notes receivable during the last two months of the year.
Dec. 1 Loaned $12,000 cash to G. Kingsley on a 1-year, 6% note.
 WORKSHEET IV- ACT2100 – FINANCIAL ACCOUNTING 1
16 Sold goods to D. Jones, receiving a $2,400, 60-day, 7% note.
31 Accrued interest revenue on all notes receivable.
Instructions
Journalize the transactions for Flint Distributors.

Dec 1 Notes Receivable 12,000

Cash 12,000
Dec 16 Notes Receivable 2,400
Sales Revenue 2,400
Dec 31 Interest Receivable 748 (12000x6%x1/1=720+2400x7%x60/360=28)
Interest Revenue 748

36. On February 7, Camp Company sold goods on account to Fillmore Enterprises for $3,200, terms 2/10, n/30. On March
9, Fillmore gave Camp a 60-day, 12% promissory note in settlement of the account. Record the sale and the
acceptance of the promissory note on the books of Camp Company.
Feb 7 Accounts Receivble $3,200
Sales Revenue (to record sales) $3,200
March 9 Notes Receivable $3,200
Accounts Receivable $3,200
(to record acceptance of notes receivable)

37. On March 9, Fillmore gave Camp Company a 60-day, 12% promissory note for $3,200. Fillmore honors the note on
May 9. Record the collection of the note and interest by Camp assuming that no interest has been accrued.
May 9 Cash $3,264 (Interest -$3,200x12%x60/360 = 64)
Notes receivable $3,200
Interest revenue 64

38. On March 9, Fillmore gave Camp Company a 60-day, 12% promissory note for $3,200. Fillmore dishonors the note on
May 9. Record the entry that Camp would make when the note is dishonored, assuming that no interest has been
accrued.
May 9 Accounts Receivable-Filmore $3,264
Interest Revenue $64
Notes Receivable $3,200
(to record dishonour of notes receivable)

39. The December 31, 2009 balance sheet of Sauder Company had Accounts Receivable of $500,000 and a credit balance
in Allowance for Doubtful Accounts of $33,000. During 2010, the following transactions occurred: sales on account
$1,400,000; sales returns and allowances, $50,000; collections from customers, $1,150,000; accounts written off
$35,000; previously written off accounts of $5,000 were collected.
Instructions
(a) Journalize the 2010 transactions.
Date Account Dr Cr
Accounts receivable $1,400,000
Sales $1,400,000
To record sales

Date Account Dr Cr
Sales return and allowance $50,000
Accounts receivable $50,000
To record credit to customers

Date Account Dr Cr
Cash $1,150,000
Accounts receivable $1,150,000
To record collection of receivables

Date Account Dr Cr
Allowance for doubtful account $35,000
Accounts receivable $35,000
To write off account

Date Account Dr Cr
Accounts receivable $5,000
Allowance for doubtful account $5,000
To reverse write off of account

Date Account Dr Cr
Cash $5,000
Accounts receivable $5,000
To record collection of account
 UNIVERSITY OF GUYANA
FACULTY OF SOCIAL SCIENCES
DEPARTMENT OF BUSINESS & MANAGEMENT STUDIES
WORKSHEET IV- ACT2100 – FINANCIAL ACCOUNTING 1
(b) If the company uses the percentage of sales basis to estimate bad debts expense and anticipates 2% of net sales
to be uncollectible, what is the adjusting entry at December 31, 2010?
Date Account Dr Cr $1,400,000-$50,000=$1350,000
Bad debt expense $27,000 2%x$1,350,000=$27,000
Allowance for doubtful accounts $27,000

(c) If the company uses the percentage of receivables basis to estimate bad debts expense and determines that
uncollectible accounts are expected to be 4% of accounts receivable, what is the adjusting entry at December
31, 2010?
Date Account Dr Cr Adjustment required =Required balance - Balance before adjustment
=(665,000*4%)-3000=26,600-3000=23,600
Bad debt expense $23,600
Allowance for doubtful accounts $23,600

(d) Which basis would produce a higher net income for 2010 and by how much?
Net income higher with percentage of receivables basis by
percentage of sales basis - percentage of receivables basis
27000-23,600=3400

On May 1, 2020, Pinkley Company sells office furniture for $90,000 cash. The office furniture originally cost $225,000
when purchased on January 1, 2013. Depreciation is recorded by the straight-line method over 10 years with a salvage
value of $22,500.
40. What depreciation expense should be recorded on this asset in 2010?

2010 Depreciation Expense $20,250

Accumulated Depreciation $20,250
41. What gain should be recognized on the sale? Cost of office furniture $225,000
Less Accumulated dep($20,250x7years+$20,250/12x4) 148,500
Book Value at date of disposal 76,500
Proceeds from sale 90,000
Gains on disposal of plant asset 13,500

42. Process the Journal Entries to record the sale on the Asset

May 1 Cash $90,000

Accumulated Dep-Office furniture 148,500
Office furniture $225,000
Gains on disposal of office furniture 13,500

43. Mather Company purchased equipment on January 1, 2020 at a total invoice cost of $224,000; additional costs of
$4,000 for freight and $20,000 for installation were incurred.The equipment has an estimated salvage value of $8,000
and an estimated useful life of five years. The amount of accumulated depreciation at December 31, 2021 if the
straightline method of depreciation is used is?

(Total cost -salvage value÷useful life×2($248,000-$8,000=$240,000÷5=$48,000×2=$96,000

44. Guardado Company purchased a new machine for $300,000. It is estimated that the machine will have a $30,000
salvage value at the end of its 5-year useful service life. The double-decliningbalance method of depreciation will be
used.
Instructions
Prepare a depreciation schedule which shows the annual depreciation expense on the machine for its 5-year life.

Year Beginning Declining Bal Annual Depreciation Accumulated Book Value

Book Value$ Rate Expense Depreciation
1 300,000 40% 120,000 120,000 180,000
2 180,000 40% 72,000 192,000 108,000
3 108,000 40% 43,200 235,000 64,800
4 64,800 40% 25,920 261,000 38,880
5 38.880 40% 15,552 276,672 23,328

45. Marlow Company purchased equipment on January 1, 2019 for $70,000. It is estimated that the equipment will have a
$5,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 100,000
units over its 5-year life.
Instructions
Answer the following independent questions.
1. Compute the amount of depreciation expense for the year ended December 31, 2019, using the straight-line
method of depreciation. 1. $65,000÷5 or 20%of $65,000 =$13,000
2. If the company uses the double-declining-balance method of depreciation, what is the balance of the
Accumulated Depreciation—Equipment account at December 31, 2021?
 WORKSHEET IV- ACT2100 – FINANCIAL ACCOUNTING 1
Year Beginning Declining Bal Annual Depreciation Accumulated Book Value
Book Value$ Rate Expense Depreciation
2019 70,000 40% 28,000 28,000 42,000
2020 42,000 40% 16,800 44,800 25,200
2021 25,000 40% 10,080 54,880 15,120

46. Gurney Company sold equipment on July 31, 2020 for $50,000. The equipment had cost $140,000 and had $80,000 of
accumulated depreciation as of January 1, 2020. Depreciation for the first 6 months of 2020 was $8,000.
Instructions
Compute the Gain/Loss on Sale and Prepare the journal entry to record the sale of the equipment.
Cost of office furniture $140,000
Less Accumulated dep($80,000+8,000+1,333.33) 89,333
Book Value at date of disposal 52,000
Proceeds from sale 50,000
Gains on disposal of plant asset $666.67

The journal entry to record the sale of the equipment

July 31 Cash $50,000
Accumulated Dep-Equipment 189,333.33
Equipment $140,000
Gains on disposal of office furniture 666.67

47. Payne Company purchased equipment in 2013 for $90,000 and estimated a $6,000 salvage value at the end of the
equipment's 10-year useful life. At December 31, 2019, there was $58,800 in the Accumulated Depreciation account
for this equipment using the straight-line method of depreciation. On March 31, 2020, the equipment was sold for
$24,000. Prepare the appropriate journal entries to remove the equipment from the books of Payne Company on March
31, 2020.
Mar 3-1 Cash $24,000
Accumulated Dep- Equipment 60,900
Equipment $90,000
Gain on Disposal 6,900

48. Judson Company sold a machine for $15,000. The machine originally cost $35,000 in 2007 and $8,000 was spent on a
major overhaul in 2010 (charged to Machine account). Accumulated Depreciation on the machine to the date of
disposal was $28,000.
Prepare the appropriate journal entry to record the disposition of the machine.
Cash $15,000
Accumulated Dep-Equipment 28,000
Equipment ($35,000+$8,000) $43,000
Gain/loss on Disposal 0

49. Donahue Company sold office equipment that had a book value of $6,000 for $8,000. The office equipment originally
cost $20,000 and it is estimated that it would cost $25,000 to replace the office equipment.
Prepare the appropriate journal entry to record the disposition of the office equipment.

Cash $8,000
Accumulated Dep-Equipment 14,000
($20,000-$6,000)
Equipment $20,000
Gain/loss on Disposal 2,000

50. Rizen Company purchases a factory machine at a cost of $18,000 on January 1, 2021. The company
expects the machine to have a salvage value of $2,000 at the end of its 4-year useful life. Rizen
Company uses the declining-balance depreciation method using double the straight-line rate.
a. Compute the depreciation for 2021 and 2022 for the factory machine and prepare the
depreciation schedule for 2021 and 2022.
Straight line rate is 25%(100/4) , Double straight line rate is 50%
2021 50% of $18,000 = $9,000 , 2022 50% of $9,000 = $4,500
Year Beginning Declining Bal Annual Depreciation Accumulated Book Value
Book Value$ Rate Expense Depreciation
2021 18,000 50% $9,000 $9,000 9,000
2022 9,000 50% 4,500 13,500 4,500

b. Prepare the journal entries as at Dec 31 2021 and Dec 31 2022 to record the depreciation expense
for the factory machine
 UNIVERSITY OF GUYANA
FACULTY OF SOCIAL SCIENCES
DEPARTMENT OF BUSINESS & MANAGEMENT STUDIES
WORKSHEET IV- ACT2100 – FINANCIAL ACCOUNTING 1
2021
Dec 31 Depreciation Expense $9,000
Accumulated Dep $9,000
2022
Dec 31 Depreciation Expense $4,500
Accumulated Dep $4,500

c. Rizen Company sold the factory machine on Jan 1, 2023 for $6,000.
i. Compute the gain or loss on disposal of the factory machine
Book Value at Date of disposal $4,500
Proceeds from Sale 6,000
Gain on Disposal 1,500
ii. Prepare the journal entry to record the disposal of the factory machine
Jan 1 Cash $6,000
Accumulated Dep 13,500
Factory Machine $18,000
Gain on Disposal 1,500

51. Gagner Clinic purchases land for $130,000 cash. The clinic assumes $1,500 in property taxes due on the land. The title
and attorney fees totaled $1,000. The clinic has the land graded for $2,200. What amount does Gagner Clinic record as
the cost for the land? $134,700($130,000+$1,500+$1,000+$2,200)

52. Identify the basic concepts of an accounting information system

Is an accounting system that collects and processes transaction data and communicates financial information to
decision makers.