ACC 577 OUTLET Great Stories /acc577outlet.com ACC 577 OUTLET Great Stories /acc577outlet.com | Page 29

Question 1
On December 30, 2004, Astor Corp. sold merchandise for $75,000
to Day Co. The terms of the sale were net 30, FOB shipping point.
The merchandise was shipped on December 31, 2004, and arrived
at Day on January 5, 2005. Due to a clerical error, the sale was
not recorded until January 2005 and the merchandise, sold at a
25% markup, was included in Astor's inventory at December 31,
2004. As a result, Astor's cost of goods sold for the year ended
December 31, 2004, was
Question 2
Foster Co. adjusted its allowance for uncollectible accounts at
year end. The general ledger balances for the accounts receivable
and the related allowance account were $1,000,000 and $40,000,
respectively. Foster uses the percentage-of-receivables method to
estimate its allowance for uncollectible accounts. Accounts
receivable were estimated to be 5% uncollectible. What amount
should Foster record as an adjustment to its allowance for
uncollectible accounts at year end?
Question 3
Jones Wholesalers stocks a changing variety of products. Which
inventory costing method will be most likely to give Jones the
lowest ending inventory when its product lines are subject to
specific price increases?
Question 4
Fenn Stores, Inc. had sales of $1,000,000 during December 2004.
Experience has shown that merchandise equaling 7% of sales will
be returned within 30 days and an additional 3% will be returned
within 90 days. Returned merchandise is readily resalable. In