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• There are two exercises in this Project 1.2; Journal Entries for Inventory & Accounts Receivable Part I and Journal Entries for Inventory & Accounts Receivable Part II.
• Please read the following instructions and review the table carefully. Then, enter answers for journal items [A] to [L] for Part II in the next two items in this Lesson, called Project 1.2 Journal Entries for Inventory & Accounts Receivable Part I and Project 1.2 Journal Entries for Inventory & Accounts Receivable Part II.

The Balance Sheet of the Illini as of 12/31/20X0:

Illini Company, Inc.Balance Sheet as of 12/31/20X0

Current Assets:

Cash 1,500,000

Accounts receivable, net 18,000

Inventory 50,000

Total current assets 1,568,000

Equipment 90,000

Goodwill 20,000

Total assets 1,678,000

Liabilities and shareholders' equity

Shareholders' equity:

Common stock, 20,000 shares outstanding, $1 par 20,000

Additional paid-in capital 280,000

Retained earnings 1,378,000

Total shareholders' equity 1,678,000

Total liabilities and shareholders' equity $1,678,000

Note that all additional paid-in capital (APIC) sub accounts (e.g., APIC-options and APIC-treasury stock), if any, are tracked in the Additional paid-in capital account on the Balance Sheet.

Project 1.2 Topic: Inventory and Accounts Receivable Part 1

Illini Company uses a LIFO periodic inventory system and physically counts inventory only at year-end. Illini has the following transactions affecting inventory in 20X1 and 20X2 (suppose there is no loss of inventory):

1/1/20X1 Beginning balance: 1,000 units @ $50/unit

2/15/20X1 Purchase 6,000 units @ $65/unit in cash

4/1/20X1 Purchase 8,000 units @ $60/unit on account with terms of 2/10, n/30. Illini uses the gross method to record purchases.

4/9/20X1 Pay $392,000 ($400,000 less 2% discount) for 4/1/20X1 purchases

4/28/20X1 Pay the remaining $80,000 for 4/1/20X1 purchases

9/1/20X1 Sell and ship 10,000 units @ $100/unit on credit (i.e., not receiving cash right away) to a customer f.o.b. shipping point

12/28/20X1 Sell and ship 2,000 units @ $100/unit on credit to a customer f.o.b. destination

1/3/20X2 The customer receives the products shipped on 12/28/20X1

4/1/20X2 Purchase 8,000 units @ $70/unit in cash

9/1/20X2 Sell and ship 10,000 units @ $100/unit on credit to a customer f.o.b. shipping point

Project 1.2 Topic: Inventory and Accounts Receivable Part 2

Illini Company uses the Balance Sheet approach to estimate bad debt. On 12/31/20X0 (or equivalently 1/1/20X1), Illini's allowance for uncollectible accounts has a credit balance of $2,000. For 20X1 and 20X2 sales, please refer to the information disclosed above. During 20X1 and 20X2, Illini collects $980,000 and $1,160,000, respectively, of the receivables. The write-offs in 20X1 and 20X2 are $1,000 and $2,000, respectively. Illini has the following age summary of year-end accounts receivable.

Age groups	12/31/20X1				12/31/20X2
	Amounts	Estimated percent uncollectible			Amounts	Estimated percent uncollectible
0-60 days	$20,000	3%			$40,000	3%
61-90 days	$10,000	10%			$20,000	10%
91-120 days	$5,000	25%			$10,000	25%
Over 120 days	$4,000	50%			$7,000	50%
Total	$39,000				$77,000

Project 1.2 Part 2 Balance Sheet

Date	Account Name			Debit	Credit
20X1 collections	Cash			[A]
		Accounts Receivable			[B]
20X1 write-offs	Allowance for U/A			[C]
		Accounts Receivable			[D]
20X1 provision for doubtful accounts:
	Bad debt expense			[E]
		Allowance for U/A			[F]
20X2 collections:	Cash			[G]
		Accounts Receivable			[H]
20X2 write-offs:	Allowance for U/A			[I]
		Accounts Receivable			[J]
20X2 provision for doubtful accounts:
	Bad debt expense			[K]
		Allowance for U/A			[L]

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