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ACCT 101 Principles Of Accounting

tag 0 Download 3 Pages / 501 Words tag 07-07-2021

Question:

You are the financial officer for N.A.E Fun Store, a retailer that sells toys for kids. The business owner, Abdullah recently reviewed the annual financial statements you prepare and sent you an email stating that he thinks you overstated net income. He explains that although he has invested a great deal in security, he is sure shoplifting and other forms of inventory shrinkage have occurred, but he does not see any deduction for shrinkage on the income statement. The store uses a perpetual inventory system. 

Required: Prepare a two paragraphs memorandum that responds to the owner's concerns. 

  • On May 11, Salam Co. accepts delivery of $30,000 of merchandise it purchases for resale from Hiyyah Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods cost Hiyyah $20,000.
  • On May 11, when the goods are delivered, Salam pays $335 to Express Shipping for delivery charges on the merchandise.
  • On May 12, Salam returns $1,200 of goods to Hiyyah, who receives them one day later and restores them to inventory. The returned goods had cost Hiyyah $800.
  • On May 20, Salam mails a check to Hiyyah Corporation for the amount owed. Hiyyah receives it the following day.

Required

  • Please prepare entries that Salam Co. records for these transactions. (2 marks)(Note: Salam Company and Hiyyah Corporation use a perpetual inventory system.) 

Use the following adjusted trial balance of Juffali Trading Est. to answer the below

Juffali Trading Est

Adjusted Trial Balance

For Year Ended December 31, 2016


Account Title    Debit             Credit   
Cash    $7,000
Accounts receivable         16,500
Office supplies           2,000
Trucks  170,000
Accumulated depreciation—Trucks . $35,000
Land    75,000
Accounts payable     11,000
Interest payable       3,000
Long-term notes payable       52,000
Common Stock   10,000
Retained Earnings   151,000

Dividends           19,000
Sales Revenue     128,000
Depreciation expense—Trucks           22,500
Salaries expense           60,000
Office supplies expense             7,000
Repairs expense—Trucks   _11,000_       ____        
Totals   $390,000        $390,000

Required:

  • Prepare the Single-Step Income Statement as of December 31, 2016. 
  • Prepare the Classified Balance Sheet as of December 31, 2016.
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