Accounting in Palisade Limited company

Question 1 Palisade Limited began the current year with $425,000 in Accounts Receivable and a balance in Allowance for Doubtful Accounts of $84,290. During the year, the company sold goods for $5,650,000 on credit and collected $5,450,000 from customers. During the year, accounts receivable valued at $41,300 were written off as being uncollectible. $600 of accounts that were written off as uncollectible were actually collected later on during the year (these cash receipts were not included in the $5,450,000 figure given above). Required: Determine the amount of Bad debts expense for the current year and the ending balance in the Allowance for doubtful accounts assuming that the company uses: (a) the percentage of sales method (long-run estimated bad debts are .5% (1/2 of 1%) of credit sales), and (b) the aging method (the required balance in the allowance for doubtful accounts account at the end of the year is $73,240). Question 2 The following list shows the purchases and sales of inventory for the Snorkel Enterprises Limited for the current year. The company uses the periodic inventory system. Date Purchases Sales January 1 (beginning balance) 3,000 @ $42.00 January 9,000 @ $44.50 9,000 $890,000 February 3,000 @ $45.15 4,000 $396,000 March 65,000 @ $45.50 52,000 $5,252,000 April 9,000 $909,000 May 3,000 $308,000 June 60,000 @ $46.15 21,000 $2,163,000 July 34,000 @ $46.20 32,000 $3,328,000 August 19,000 $1,977,000 September 17,500 $1,837,500 October 30,000 @ $47.40 12,500 $1,312,500 November 1,000 @ $48.11 8,000 $841,000 December 4,000 @ $48.25 10,000 $1,050,000 Required: Determine the value of ending inventory on December 31 and cost of goods sold for the year: (a) if the company uses the periodic FIFO approach to inventory valuation. (b) if the company uses the periodic Weighted Average approach to inventory valuation. ACCT 140 Assignment 3 Winter 2018 Page 2 Question 3 Cozumel Concrete Limited (CCL) acquired a machine on March 1, 2005 for $510,000. The expected life of the machine was 84 months and the expected salvage value was estimated to be $48,000 at the end of its useful life. On January 1, 2009, an additional investment of $110,200 was made which reduced operating costs by 40%. The machine was retired from operations on February 28, 2012. Maintenance costs for the machine were: $7,500 in 2006 and 2007; $8,000 in 2008 and 2009: $12,000 in 2010 and 2011. Required: (a) Draw up a chart showing the beginning net book value, depreciation for each year, and the ending net book value, assuming that CCL elected to depreciate the machine using (i) straight-line depreciation. (ii) diminishing balance depreciation with an amortization rate of 30%. (b) Determine the accounting gain or loss if the actual cash received on the sale of the machine was $40,000, $60,000 and $80,000 on February 28, 2012. Make these calculations under both straight-line depreciation and diminishing balance depreciation. [Note: Do not consider the facts in part (b) when completing your answer to part (a) – in other words, assume that the company learns of the actual salvage value after all depreciation calculations in part (a) are completed.] Question 4 Data from the Sourire Corporation (SC) financial statements are summarized below. During 2014, SC sold land that had originally cost $70,000 for $180,000. It also sold a building for $45,000 that originally cost $205,000 and had been amortized to a net book value of $120,000. Sourire Corporation Income Statement Data for the year ending December 31, 2014 Amortization/Depreciation Sales revenue $2,430,000 expenses $260,000 Loss on sale of assets $75,000 Gain on sale of assets $110,000 Operating expenses $365,000 Interest expense $90,000 Impairment expense $115,000 Income tax expense $220,000 Cost of goods sold $940,000 ACCT 140 Assignment 3 Winter 2018 Page 3 Balance Sheet Data as at December 31 Assets 2013 2014 Accounts payable $210,000 $184,000 Accounts receivable $420,000 $330,000 Accrued expenses $140,000 $160,000 Accumulated depreciation – plant, property and equipment $290,000 $445,000 Allowance for doubtful accounts $25,000 $30,000 Bonds payable $605,000 $690,000 Cash and cash equivalents $60,000 $50,000 Common stock $410,000 $505,000 Future income taxes (right-hand balance) $70,000 $40,000 Goodwill (net) $395,000 $280,000 Income taxes payable $80,000 $30,000 Intangible assets (net of depreciation) $60,000 $40,000 Interest payable $20,000 $25,000 Inventory $370,000 $415,000 Mortgage payable $180,000 $130,000 Plant, property and equipment $1,050,000 $1,525,000 Preferred stock $155,000 $110,000 Prepaid expenses $50,000 $5,000 Retained earnings $270,000 $456,000 Short-term investments $50,000 $80,000 Treasury stock - $80,000 Required: Prepare a cash flow statement (indirect method) for the year ended December 31, 2014.