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# UT Arlington ACCT 3311 - Notes

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What are the journal entries when the company provides a cash discount to its customer? Net GrossSale DR AR, CR Sales Dr AR, CR SalesPaymentEarly Payment Dr Cash, CR A/R DR Cash, DR Sales discount, CR A/RAfter discount PeriodDR Cash, CR A/R, CR Sales discount forfeited Dr Cash, CR A/RHow is bad debt expense calculated? Credit Sale * estimates bad debt expenseYou are given the following calculations for ending inventory: a. \$342,187 LIFO b. \$497,001 FIFO c. \$391,768 Average Cost method d.When implementing Lower of Cost or Net Realizable value, when will ending inventory have the lowest value: when it is calculated by individual item, by product line, or for the entire inventory as one pool? What are the main two methods to estimate inventory cost? How are they different?Question 1: UNDER 90 DAYS Short term investment What amount should be reported as cash? 132,200 + 128,000 + 1,000 + 18,000 = 279,200 Question 2: Southwest Company sold supplies of \$46,000 to Northeast Company on April 12 of the current year, with terms 1/15, n/60. Southwest uses the gross method of accounting for cash discounts. What entry would Southwest make on April 19, assuming the customer made all of the payment on that date? (In the middle lines, start with either "DR", "CR", or "none", and the rest either include the name of the account and amount, or "none" if blank.) 46,000 * (1 – 0.01) = \$45,540DR Cash 45540DR Sales discount 460CR Account Receivable 46,000Question 3: For 2019, Rahal's Auto Parts estimates bad debt expense at 1% of credit sales. The company reported accounts receivable and an allowance for uncollectible accounts of \$86,500 and \$2,100, respectively, at December 31, 2018. During 2019, Rahal's credit sales were \$404,000. Rahal's 2019 bad debt expense under income statement approach is: 1% * 404,000 = 4040Question 4: Tropical Tours reported revenue of \$250,000 for its year ended December 31, 2021. During the year, accounts receivable increased from \$30,000 to \$36,000. How much cash did Tropical Tours cash collect from its customers? Question 5: Cash in bank—savings account 132,200 Certificates of deposit (60-day) 128,000 Cash on hand 1,000 Postdated checks 6,800 Cash refund due from State Taxing Authority 52,000 Checking account balance 18,000The Calhoun Superstore adopted the dollar-value LIFO method for its cars department on January 1, 2018, when the inventory value of its one inventory pool was \$660,000. The following information is available at the end of 2018 and 2019: Year Ended Ending Inventory at Year-End Costs Ending Inventory at Base Year Costs Cost Index (Relative to Base Year) 2018 851,000 740,000 1.15 2019 927,200 760,000 1.22 In a separate inventory pool for clothes, Calhoun uses the LIFO inventory method to estimate its ending inventories. The following information is available at the end of 2019: Cost Retail Inventory, Jan 1 65,000 67,000 Purchases 330,000 560,000 Net markups 12,600 Net markdowns 9,000 Net sales 390,000 1. Compute the inventory value for cars at December 31, 2019 using the dollar-value LIFO method. 2. Estimate the ending inventory for clothes as of December 31, 2019. 3. If Calhoun uses the lower-of-cost-or-net-realizable-value per inventory pool, what is the reported inventory amount on December 2019? The net realizable values are 730,000 and 115,000 for the cars and clothes pools

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