Question

1. Both the gross amount of receivables and the allowance for doubtful accounts should be reported in the financial statements.

A. true

B. false

Would much appreciate a clear explanation or attached sources.

2. Partridge Bookstore had 500 units on hand at January 1, costing $9 each. Purchases and sales during the month of January were as follows:

• Jan. 14: Sales, 375 @ $14
• Jan. 17: Purchases, 250 @ $10
• Jan. 25: Purchases, 250 @ $11
• Jan. 29: Sales, 260 @ $16

Partridge does not maintain perpetual inventory records. According to a physical count, 365 units were on hand at January 31.

The cost of the inventory at January 31, under the LIFO method is $???

Answer 1

1. Allowance for doubtful accounts is a contra account to accounts receivable which arrives at net accounts receivable.

The answer is True.

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2. Under the Last in first out (LIFO) method of inventory valuation, Cost of goods sold consists of the units from recent purchases. Ending inventory consists of the units from beginning inventory and earliest purchases.

365 units in ending inventory consists of beginning inventory.

Cost of inventory at January 31 = 365 units * $9 per unit

= $3,285