Question

7-On January 1, GV Company adopted the 1 was $112,000. On December 31, endu year was 1.05 company adopted the dollar-value LIFO method. The inventory cost on January ,00. On December 31, ending inventory had a cost of $136,400. The cost de • For what amount would ending inventory be reported • Prepare the adjusting entry. 8-Net income of MS Company was $45,000. The accounting records reveal depreciation expense of $80,000 as well as increases in prepaid rent, salaries payable, and income taxes payable of $60,000, $23,000, and $20,000, respectively. • Prepare the cash flows from operating activities section of MS statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) Net income 45,0col 80,00 of Add: Depreciation Less Prepaid rent -60,407 lagiocoo2 Ald: Salary papable : All Incore tap 9 At year end DD Digital categorizes its accounts receivable into three age groups for purposes of 20,000 a estimating its allowance for uncollectible accounts. 23,000 1. Accounts 0-30 days = $123,000, estimated uncollectible = 5%. 2. Accounts 30-60 days past due = $17,100; estimated uncollectible = 10%. 3. Accounts more than 60 days past due = $6,800; estimated uncollectible = 15%. The beginning balance in DD allowance for uncollectible accounts was $30,700. • Compute the 12/31/2021 balance for DD's allowance for uncollectible accounts.

Answer 1

Question 7.

Solution:

Price Index Ending Inventory Date (at base yr price) Layers 1-Jan $ 112,000 $ 112,000 31-Dec $ 129,905 $ 112,000 $ 17,905 Ending inventories (Dollar value LIFO) 1 $ 112,000 1 $ 112,000 1.05 18,800 $ 130,800

Thus, amount of ending inventory to be reported = $130,800

Adjusting journal entry:

Date	Account Titles & Explanation	Debit	Credit
Dec. 31	Loss on inventory write down	$ 5,600
	Inventory		$ 5,600

i.e. $136,400 - 130,800

Question 8. This is correctly done by you.

Question 9.

Solution:

Accounts rec. bal. unfollectible in % Uncollectible amount $ 123,000 5% $ 6,150 $ 17,100 10% $ 1,710 6,800 15% $ 1,020 Total 8,880 $

so, by using aging method: 12/31/2021 balance for DD's allowance for uncollectible accounts = $8,880.