Required1. Assume that Urban One sells a $300 gift certificate to a customer, collecting the $300 cash in advance.Prepare the journal entry for (a) collection of the cash for delivery of the gift certificate to the customer and(b) revenue from the subsequent delivery of merchandise when the gift certificate is used.2. How can keeping less inventory help to improve Urban One's profit margin?3. Cathy Hughes understands that many companies carry considerable inventory, and she is thinking ofcarrying additional inventory of merchandise for sale. Cathy desires your advice on the pros and cons ofcarrying such inventory. Provide at least one reason for, and one reason against, carrying additionalinventory.

1. Record journal entry for collection of cash for gift certificate and use of gift certificate as…

Answered: Required 1. Assume that Urban One sells…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Subject : Accounting You just took a new job as a controller of a large company that purchases and sells surf boards (has inventory). The owner has asked you to advise her on how she should select the correct inventory valuation method for the inventory (LIFO, FIFO and Weighted Average). What would be your response?
Consider the following transactions for Brighton Drug Store: View the transactions. Requirements 1. Journalize the purchase transactions. Explanations are not required. 2. In the final analysis, how much did the inventory cost Brighton Drug Store? ... Requirement 1. Journalize the purchase transactions. Explanations are not required. (Assume the company uses a perpetual inventory system. Round the answers to the nearest whole dollar. Record debits first, then credits. Exclude explanations from journal entries.) Jan. 2: Brighton Drug Store purchased $20,300 worth of inventory on account with credit terms of 2/15, n/45, FOB shipping point from Birch Medical Supplies. Date Jan. 2 Accounts Debit Credit Transactions Jan. 2 Jan. 3 Brighton Drug Store purchased $20,300 worth of inventory on account with credit terms of 2/15, n/45, FOB shipping point from Birch Medical Supplies. Brighton Drug Store paid a $160 freight charge. Jan. 8 Brighton Drug Store returned $6,500 of the merchandise due to…
Every day, businesses have to make decisions that affect their bottom line. One such decision pertains to valuing inventory. Imagine that you have decided to open a new electronics store. As one of your first tasks, your accountant has asked you to adopt an inventory cost assumption for inventory valuation. Explain which method you would adopt and why.
Consider the following transactions for Elfland Toys: A (Click the icon to view the transactions.) Requirements 1. Journalize the purchase transactions. Explanations are not required. 2. In the final analysis, how much did the inventory cost Elfland Toys? Requirement 1. Journalize the purchase transactions. Explanations are not required. (Assume the company uses a perpetual inventory system. Record debits first, then credits. Exclude explanations from journal entries.) Oct. 8: Elfland Toys purchased $114,800 worth of ConnectABlock toys on account with credit terms of 2/10, n/ 60. Date Accounts Debit Credit Oct. 8 More Info Oct. 8 Elfland Toys purchased $114,800 worth of ConnectABlock toys on account with credit terms of 2/10, n/60. Oct. 12: Elfland Toys returned $11,400 of the merchandise to ConnectABlock due to damage during shipment. Oct. 12 Elfland Toys returned $11,400 of the merchandise to ConnectABlock due to damage during shipment. Date Accounts Debit Credit Oct. 16 Elfland Toys…
Read the below case study and answer the required questions. The “Wise Dimension” owned by Mr. Cousins. Wise Dimension imports office supplies from all over the world, and supplies them via online and offline channels. Wise Dimension uses the Periodic Inventory method. The trial balance as at 31 May 2017 is as follows: Trial Balance as at 31 May 2017 Acct No. Account name Acct No. Debit Credit 101 Cash at bank 101 $90,000 105 Account receivable 105 $76,800 110 Merchandise Inventory 110 $150,000 115 Supplies 115 $8,000 120 Prepaid Insurance 120 $17,000 135 Office furniture 135 $35,000 137 Acc. Depreciation. - Furniture 137 $15,000 140 Office Furniture 140 $20,000 141 Acc. Depreciation – Office Equipment 141 $9,000 201 Accounts payable 201 $44,960 202 Interest Payable 202 $4,000 210 Loan Payable 210…
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Consider the following transactions for Hampton Drug Store: View the transactions. Requirements 1. Journalize the purchase transactions. Explanations are not required. 2. In the final analysis, how much did the inventory cost Hampton Drug Store? Requirement 1. Journalize the purchase transactions. Explanations are not required. (Assume the company uses a perpetual inventory system. Round the answers to the nearest whole dollar. Record debits first, then credits. Exclude explanations from journal entries.) Feb. 2: Hampton Drug Store purchased $21,500 worth of inventory on account with credit terms of 2/15, n/45, FOB shipping point from Ingles Medical Supplies. Date Feb. 2 Accounts Debit Credit Transactions - Feb. 2 Feb. 5 Hampton Drug Store purchased $21,500 worth of inventory on account with credit terms of 2/15, n/45, FOB shipping point from Ingles Medical Supplies. Hampton Drug Store paid a $140 freight charge. Feb. 8 Hampton Drug Store returned $5,600 of the merchandise due to…
[The following information applies to the questions displayed below.] Suppose that David has elected to account for inventories and has adopted the last-in, first-out (LIFO) inventory-flow method for his business inventory of widgets (purchase prices below). Widget Number 1 Purchase Date Direct Cost Other Costs Total Cost August 15 $ 2,200 Number 2 October 30 2,350 Number 3 November 10 2,400 Widget Purchase Date Number 4 Early spring Summer Fall In late December, David sold one widget, and next year David expects to purchase three more widgets at the following estimated prices: Number 5 Number 6 $ 2,100 2,200 2,300 David's §481 adjustment amount Number of year(s) Estimated Cost $ 2,600 2,260 2,400 $ 100 150 100 d. Suppose that David initially adopted the LIFO method, but wants to apply for a change to FIFO next year. What would be his §481 adjustment for this change, and over how many year(s) would he make the adjustment? + FIFO

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