Q3. a. How does a company can dispose of its accounts receivable through factoring? Assume that Hendredon Furniture factors $600,000 of receivables to Federal Factors on Nov. 15. Federal Factors assesses a service charge of 2% of the amount of receivables sold. Show the journal entry to record the sale.
b. Inventory records for Dunbar Incorporated revealed the following:
Date |
Transaction |
Number of Units |
Unit Cost |
Apr 1 |
Beginning inventory |
500 |
$2.40 |
Apr 20 |
Purchase |
400 |
$2.50 |
Dunbar sold 700 units of inventory during the month. Calculate ending inventory using weighted-average cost method.
c. Faster Company purchased equipment in 2010 for $104,000 with an estimated salvage value of $8,000 and a 10-year useful life. At December 31, 2016, there was $67,200 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2017, the equipment was sold for $21,000. Prepare the appropriate journal entries to remove the equipment from the books of Faster Company on March 31, 2017.
d. How a company can revise the depreciation rate of a plant or machinery? Jack's Copy Shop bought equipment for $240,000 on January 1, 2018. Jack estimated the useful life to be 3 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2019, Jack decides that the business will use the equipment for a total of 5 years. What is the revised depreciation expense for 2019?
e. During 2016, a company sells 200 units of inventory for $50 each. The company has the following inventory purchase transactions for 2016:
Date |
Transaction |
Units sold |
Unit cost |
Total cost |
Jan 1 |
Beginning inventory |
50 |
$39 |
$ 1950 |
May 5 |
Purchase |
80 |
38 |
|
Nov 3 |
Purchase |
70 |
70 |
Actual sales by the company include its entire beginning inventory, 80 units of inventory from the May 5 purchase, and 70 units from the November 3 purchase. Required: Calculate cost of goods sold and ending inventory for 2016 assuming the company uses specific identification.
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