Answers: Principles of Accounting

Case no. 6












Submitted
in Fulfillment of the Requirements in
Principles of Accounting

















To:
Prof. Carmelita C. Clerigo


By:
Group 4
Lim, Rapunzel Grace
Lotilla, Marie Elizabeth
Nograles, Margarita Ignacia

July 2, 2014





Questions:


A. Determine the balances in Sales as at 10 April.
B. Determine the balances in Purchases as at 10 April.
C. How much will be Peterson Ltd.s fire-loss claim against the insurance
company?

Answers:

A. Sales = $ 215,400

Step 1. Sales, Jan 1 - 31 March 2010 is $180,000.

Step 2. Deposits during the same period totalled 18,500.
- Based on 18,500, 60% were collection of Accounts Receivable A/R.
- 40% were cash sales.
Cash sales=18,500 x 0.40
Cash sales= 7,400

Step 3. Companys customers produced acknowledgement of credit sales totalling
28,000 from 1 April to 10 April.

Step 4. 180,000
7,400
+ 28,000
$ 215,400


B. Purchases = $ 106,400

Step 1. Purchases, 1 Jan- 31 March 2010 is $ 94,000.

Step 2. Purchases on account from Apr 1 to Apr 10 is $ 12,400.

Step 3. 94,000
+ 12,400
$ 106,400


C. Fire-loss Claim = $13,250.51

Step 1. COGS
Year 2009 Year 2008
Sales 600,000 480,000
Cost of Goods Sold (COGS) 416,000 356,000
Gross Profit (GP) 184,000 124,000
GP%=GP/Sales 184,000/600,000 124,000/480,000
GP % 30.67% 25.83%




1.1) = 30.67 + 25.83
2
= 28.25%

1.2) Sales = $ 215,400 ( considered 100%)

1.3) = 100% - 28.25%
= 71.75%

1.4) COGS= Sales x 71.75%
= 215,400 x 0.7175
COGS= $154,549.50


Step 2.
Beginning Inventory (BI) 80,000
Purchases 106,400
*Ending Inventory (EI) 18,600
COGS 154,549.50

* ENDING INVENTORY
Inventory salvaged from the fire $17,000
Inventory in transit on 10 April 1,600
that was shipped FOB
destination
$18,600

Step 3.
BI + Purchases - EI = COGS
BI + Purchases - COGS = EI
80,000 + 106,400 - 154,549.50 = EI
$ 31,850.50 = EI

Fire-loss claim = $ 31,850.50 - 18,600
= $ 13,250.51