28. On June 1, Weary Co. assigned $800,000 of accounts receivable to Kwik Financ

Question

28. On June 1, Weary Co. assigned $800,000 of accounts receivable to Kwik Finance Co, as security for a loan of $670,000, Kwik charged an up-front 2% commission on the amount of the loan: the interest rate on the note was 10%. During the first month, weary collected $220,000 on assigned accounts. On June 30, Weary made its first payment to Kwik. Entries during the first month would include: a, a credit to Accounts Receivable of $800,000. b. a debit to Interest Expense of $67,000. c. a credit to Notes Payable of $670,000. d. a credit to Notes Payable of $656,600. e. a debit to Cash of $670,000. 29. From the following information, compute cost of goods sold. Sales Purchase returns Inventory, January 1 Freight in Freight out Inventory, December 31 Purchases $30,000 1,200 2,800 1,100 1,200 2,500 15,000 a. $15,300 b. $15,200 c. $15,100 d. $14,000 e. $16,400 Eller Company uses a periodic inventory system. Relevant inventory information for the year follows: 30. 20 units@ $170 per unit 20 units @ $135 per unit 400 units@ $185 per unit 100 units $195 per unit 350 units @ $350 per unit Beginning inventory 1-Jan 23-May Purchased 5-Nov Purchased 18-Nov Purchased Sales What is the cost of goods sold on a LIFO basis? a $63,450 b. $65,750 c. $36,150 d. $33,850 e $59,050

Explanation / Answer

Since, multiple questions have been posted, I have answered the first two.

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Question 28:

A credit to notes payable of $670,000. (which is Option C)

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Explanation:

The following journal entries would be passed during the month of June:

Based on the above journal entries, we can see that only Option C is relevant and correct (refer to event 1 journal entry).

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Question 29:

The cost of goods sold is calculated with the use of following table:

Event Account Titles Debit Credit 1) Cash (670,000 - 13,400) $656,600 Finance Charges (670,000*2%) $13,400 Notes Payable $670,000 2) Cash $220,000 Accounts Receivable $220,000 3) Notes Payable $220,000 Interest Expense (670,000*10%*1/12) $33,500 Cash (220,000 + 33,500) $253,500

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