Ana,the Accountant,is Reviewing the Work of a Subordinate

question 157

Essay

Ana,the accountant,is reviewing the work of a subordinate.Ana's boss tells her to find as many errors as she can or,if there are no errors,certify that the work is done correctly.All information given relates to the month of January,2011.

Additional Information:
a.The beginning inventory was 200 units,at cost of $200 each.Purchases on January 3 were 100 units at a cost of $202 each and purchases on January 30 were 100 units at a cost of $205 each.
b.The company sold 150 units during the month for $400 each.
c.The company uses the weighted average cost flow method and a periodic inventory system.
Required: Prepare a corrected income statement for the month.

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Definitions:

Uncollectible Percentage

An estimated fraction of accounts receivable that a company does not expect to collect.

Aging

A method used in accounting to categorize accounts receivables based on the length of time an invoice has been outstanding.

Allowance Account

An account used in accounting to reduce the value of accounts receivable to a more realistic amount by accounting for potential bad debts.

Uncollectibles

Debts owed to a company that are considered unlikely to be recovered or paid.