The trial balance before adjustment of XYZ Company reports the following balances:

Q 1. The trial balance before adjustment of XYZ Company reports the following balances:
Dr.
$100,000

Accounts receivable
Allowance for doubtful accounts
Sales (all on credit)
Sales returns and allowances

Cr.
$ 2,500
750,000

40,000

Instructions
Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated
to be (1) 6% of gross accounts receivable and (2) 1% of net sales.

Q2. During June, the following changes in inventory item 29 took place:
June 1
14
24
8
10
29

Balance
Purchased
Purchased
Sold
Sold
Sold

1,400 units @ $24
900 units @ $36
700 units @ $30
400 units @ $50
1,000 units @ $40
500 units @ $44

Perpetual inventories are maintained in units only.
Instructions
What is the cost of the ending inventory for item 29 under the following methods? (Show
calculations.)
(a) FIFO.
(b) Average Cost.

Q3Ahmed Co. records purchase discounts lost and uses perpetual inventories. Prepare journal
entries in general journal form for the following:
(a) Purchased merchandise costing $900 with terms 2/10, n/30.
(b) Payment was made thirty days after the purchase.

Q4. Sales and purchases of company XYZ for the year 2010 had been $1,400,000 and
$980,000, respectively. The beginning inventory (Jan. 1, 2010) was $170,000; XYZ's gross profit
is 40% of selling price.
Instructions
Compute the cost of ending inventory.