Exercise and Problem 1. Consid Consider er the following following:: Cash in Bank – checking checking account account of $18,500, $18,500, Cash Cash on hand hand of $5 $500 00,, Postost-da date ted d chec checks ks recei eceie ed d tota totali ling ng $! $!,5 ,500 00,, and and Certi"cates of de#osit totaling $1%,000. &ow 'uch should (e re#orted as cash in the (alance sheet) a. $ 18,500. (. $ 1*,000. c. $ ,500. d. $1!+,500. .
enniso ennison n Co'#an Co'#an has has cash cash in (ank (ank of $15,0 $15,000, 00, rest restric ricted ted cash cash in a se#arate account of $!,000, and a (ank oerdraft in an account at another (ank of $1,000. ennison should re#ort cash of a. $1%,000. (. $15,000. c. $1,000. d. $18,000.
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/awre /awrence nce Co'#an Co'#an has cash cash in (ank of $,000, $,000, restr restrict icted ed cash in a se#arate account of $%,000, and a (ank oerdraft in an account at another (ank of $,000. /awrence should re#ort cash of a. $0,000. (. $,000. c. $5,000. d. $+,000
%. teinert Co'#an has the following ite's at ear-end: ear-end: Cash in (ank $!5,000 Pett cash 500 hort-ter' #a#er with 'aturit of 'onths 8,00 Postdated checks ,100 teinert should re#ort cash and cash euialents of a. $!5,000. (. $!5,500. c. $%!,00. d. $%5,800. 5. 2f a co'#an co'#an #urcha #urchases ses 'erchand 'erchandise ise on ter's ter's of 1310, 1310, n3!0, n3!0, the cash discou dis count nt aaila(l aaila(le e is uial uialent ent to what what e4ecti e4ectie e annual annual rate rate of interest interest assu'ing a !+0-da ear6) a. 17 (. 17 c. 187 d. !07 +. 9 2nc. 2nc. 'ade a $15,000 sale sale on account account with the following following ter's: ter's: 1315, 1315, n3!0. 2f the co'#an uses the net 'ethod to record sales 'ade on credit, how 'uch should (e recorded as reenue) a. $1%,00. (. $1%,850. c. $15,000. d. $15,150
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9 2nc. 'ade a $15,000 sale on account with the following ter's: 1315, n3!0. 2f the co'#an uses the gross 'ethod to record sales 'ade on credit, what is3are the de(its6 in the ournal entr to record the sale) a. ;e(it ccounts
8. 9 2nc. 'ade a $15,000 sale on account with the following ter's: 310, n3!0. 2f the co'#an uses the net 'ethod to record sales 'ade on credit, what is3are the de(its6 in the ournal entr to record the sale) a. ;e(it ccounts here is also a de(it (alance of $!,000 in the allowance for dou(tful accounts. 2f the co'#an esti'ates that 17 of its net credit sales will (e uncollecti(le, what will (e the (alance in the allowance for dou(tful accounts after the ear-end adust'ent to record (ad de(t e?#ense) a. $1,00. (. $15,00. c. $+1,000. d. $+,000. 10. =ellington Cor#. has outstanding accounts receia(le totaling $+.5 'illion as of ;ece'(er !1 and sales on credit during the ear of $% 'illion. >here is also a credit (alance of $1,000 in the allowance for dou(tful accounts. 2f the co'#an esti'ates that 87 of its outstanding receia(les will (e uncollecti(le, what will (e the a'ount of (ad de(t e?#ense recogni@ed for the ear) a. $ 5!,000. (. $ 50,000. c. $1,*0,000. d. $ 508,000. 11. =ellington Cor#. has outstanding accounts receia(le totaling $5 'illion as of ;ece'(er !1 and sales on credit during the ear of $5 'illion. >here is also a de(it (alance of $0,000 in the allowance for dou(tful accounts. 2f the co'#an esti'ates that 87 of its outstanding receia(les will (e uncollecti(le, what will (e the (alance in the allowance for dou(tful accounts after the ear-end adust'ent to record (ad de(t e?#ense) a. $,000,000. (. $ !80,000. c. $ %00,000. d. $ %0,000. 1. t the close of its "rst ear of o#erations, ;ece'(er !1, 01, Aing Co'#an had accounts receia(le of $1,080,000, after deducting the related allowance for dou(tful accounts. ;uring 01, the co'#an had charges to (ad de(t e?#ense of $180,000 and wrote o4, as uncollecti(le, accounts receia(le of $80,000. =hat should the co'#an re#ort on its
(alance sheet at ;ece'(er !1, 01, as accounts receia(le (efore the allowance for dou(tful accounts) a. $1,!%0,000 (. $1,180,000 c. $*80,000 d. $880,000 1!. Before ear-end adusting entries, ;unn Co'#ans account (alances at ;ece'(er !1, 01, for accounts receia(le and the related allowance for uncollecti(le accounts were $1,00,000 and $*0,000, res#ectiel. n aging of accounts receia(le indicated that $15,000 of the ;ece'(er !1 receia(les are e?#ected to (e uncollecti(le. >he net reali@a(le alue of accounts receia(le after adust'ent is a. $1,1+5,000. (. $1,05,000. c. $*85,000. d. $1,110,000. 1%. ;uring the ear, iner Co'#an 'ade an entr to write o4 a $1+,000 uncollecti(le account. Before this entr was 'ade, the (alance in accounts receia(le was $00,000 and the (alance in the allowance account was $18,000. >he net reali@a(le alue of accounts receia(le after the write-o4 entr was a. $00,000. (. $1*8,000. c. $1++,000. d. $18,000. 15. >he following infor'ation is aaila(le for Aur#h Co'#an: llowance for dou(tful accounts at ;ece'(er !1, 011 $ 1+,000 Credit sales during 01 800,000 ccounts receia(le dee'ed worthless and written o4 during 01 18,000 s a result of a reiew and aging of accounts receia(le in earl anuar 01!, howeer, it has (een deter'ined that an allowance for dou(tful accounts of $11,000 is needed at ;ece'(er !1, 01. =hat a'ount should Aur#h record as D(ad de(t e?#enseD for the ear ended ;ece'(er !1, 01) a. $*,000 (. $11,000 c. $1!,000 d. $,000
Use the following information for questions 16 and 17. trial (alance (efore adust'ents included the following: ;e(it Credit ales 850,000 ales returns and allowance $8,000 ccounts receia(le 8+,000 llowance for dou(tful accounts 1,50
1+. 2f the esti'ate of uncollecti(les is 'ade ( taking 7 of net sales, the a'ount of the adust'ent is a. $1!,%00. (. $1+,%%0. c. $1,000. d. $1*,%80. 1. 2f the esti'ate of uncollecti(les is 'ade ( taking 107 of gross account receia(les, the a'ount of the adust'ent is a. $,080. (. $8,+00. c. $8,%%8. d. $10,10. 18. /ankton Co'#an has the following account (alances at ear-end: ccounts receia(le $80,000 llowance for dou(tful accounts %,800 ales discounts !,00 /ankton should re#ort accounts receia(le at a net a'ount of a. $,000. (. $5,00. c. $+,800. d. $80,000. 1*. 'ithson Cor#oration had a 13131 (alance in the llowance for ;ou(tful ccounts of $0,000. ;uring 01, it wrote o4 $1%,%00 of accounts and collected $%,00 on accounts #reiousl written o4. >he (alance in ccounts he (alance in ccounts
d. $10,000. . Fasgue@ Cor#oration had a 13131 (alance in the llowance for ;ou(tful ccounts of $!0,000. ;uring 01, it wrote o4 $1,+00 of accounts and collected $+,!00 on accounts #reiousl written o4. >he (alance i n ccounts he (alance in ccounts he onl transactions a4ecting accounts receia(le were sales of $1,00,000 and cash collections of $1,150,000. >he accounts receia(le turnoer is a. 8.0. (. 8.8. c. *.+. d. 1.0. 5. 2f a #ett cash fund is esta(lished in the a'ount of $50, and contains $150 in cash and $*5 in recei#ts for dis(urse'ents when it is re#lenished, the ournal entr to record re#lenish'ent should include credits to the following accounts a. Pett Cash, $5. (. Pett Cash, $100. c. Cash, $*5G Cash Her and hort, $5. d. Cash, $100. +. 2f the 'onth-end (ank state'ent shows a (alance of $,000, outstanding checks are $%,000, a de#osit of $8,000 was in transit at 'onth end, and a check for $1,000 was erroneousl charged ( the (ank against the account, the correct (alance in the (ank account at 'onth end is a. $55,000. (. $5,000. c. $%1,000. d. $8,000. . 2n #re#aring its (ank reconciliation for the 'onth of #ril 01, &enke, 2nc. has aaila(le the following infor'ation. Balance #er (ank state'ent, %3!031 $!%,1%0 IJ check returned with %3!031 (ank state'ent %50 ;e#osits in transit, %3!031 5,000
Hutstanding checks, %3!031 5,00 Bank serice charges for #ril 0 =hat should (e the correct (alance of cash at #ril !0, 01) a. $!%,!0 (. $!!,*%0 c. $!!,%*0 d. $!!,%0 8.
Jinle, 2nc.Ks check(ook (alance on ;ece'(er !1, 01 was $%,%00. 2n addition, Jinle held the following ite's in its safe on ;ece'(er !1. 16 check for $*00 fro' Peters, 2nc. receied ;ece'(er !0, 01, which was not included in the check(ook (alance. 6 n IJ check fro' 9arner Co'#an in the a'ount of $1,800 that had (een de#osited at the (ank, (ut was returned for lack of suLcient funds on ;ece'(er *. >he check was to (e rede#osited on anuar !, 01!. >he original de#osit has (een included in the ;ece'(er !1 check(ook (alance. !6 Coin and currenc on hand a'ounted to $,*00. >he #ro#er a'ount to (e re#orted on Jinles (alance sheet for cash at ;ece'(er !1, 01 is a. $%,+00. (. $%0,800. c. $%%,%00. d. $%!,550.
*. >he cash account shows a (alance of $*0,000 (efore reconciliation. >he (ank state'ent does not include a de#osit of $%,+00 'ade on the last da of the 'onth. >he (ank state'ent shows a collection ( the (ank of $1,880 and a custo'ers check for $+%0 was returned (ecause it was IJ. custo'ers check for $*00 was recorded on the (ooks as $1,080, and a check written for $158 was recorded as $1*%. >he correct (alance in the cash account was a. $*1,0%. (. $*1,0*+. c. $*1,%5+. d. $*5,+*+. !0.
2n #re#aring its Aa !1, 01 (ank reconciliation, Catt Co. has the following infor'ation Balance #er (ank state'ent, 53!131 $!5,000 ;e#osit in transit, 53!131 5,%00 utstanding checks, 53!131 %,*00 Iote collected ( (ank in Aa 1,50 >he correct (alance of cash at Aa !1, 01 is a. $%0,%00. (. $!%,50. c. $!5,500. d. $!+,50.
!1. Hn the ;ece'(er !1, 01 (alance sheet of Fano Co., the current receia(les consisted of the following: >rade accounts receia(le $ +0,000 llowance for uncollecti(le accounts ,0006
Clai' against shi##er for goods lost in transit Ioe'(er 016 !,000 elling #rice of unsold goods sent ( Fano on consign'ent at 1!07 of cost not included in Fano s ending inentor6 +,000 ecurit de#osit on lease of warehouse used for storing so'e inentories !0,000 >otal $11,000 t ;ece'(er !1, 01, the correct total of Fanos current net receia(les was a. $+1,000. (. $8,000. c. $*1,000. d. $11,000. !.
ce Co. #re#ared an aging of its accounts receia(le at ;ece'(er !1, 01 and deter'ined that the net reali@a(le alue of the receia(les was $+00,000. dditional infor'ation is aaila(le as follows: llowance for uncollecti(le accounts at 13131Mcredit (alance $ +8,000 ccounts written o4 as uncollecti(le during 01 %+,000 ccounts receia(le at 13!131 +50,000 Nncollecti(le accounts recoered during 01 10,000 Jor the ear ended ;ece'(er !1, 01, ces uncollecti(le accounts e?#ense would (e a. $50,000. (. $%+,000. c. $!,000. d. $18,000. !!. Jor the ear ended ;ece'(er !1, 01, ;ent Co. esti'ated its allowance for uncollecti(le accounts using the ear-end aging of accounts receia(le. >he following data are aaila(le: llowance for uncollecti(le accounts, 13131 $8%,000 Proision for uncollecti(le accounts during 01 7 on credit sales of $!,000,0006 +0,000 Nncollecti(le accounts written o4, 113!031 +*,000 Esti'ated uncollecti(le accounts #er aging, 13!131 10%,000 fter ear-end adust'ent, the uncollecti(le accounts e?#ense for 01 should (e a. $+*,000. (. $+0,000. c. $10%,000. d. $8*,000. !%. Ienn Co.s allowance for uncollecti(le accounts was $1*0,000 at the end of 01 and $180,000 at the end of 011. Jor the ear ended ;ece'(er !1, 01, Ienn re#orted (ad de(t e?#ense of $+,000 in its inco'e state'ent. =hat a'ount did Ienn de(it to the a##ro#riate account in 01 to write o4 actual (ad de(ts) a. $10,000
(. $1+,000 c. $+,000 d. $!+,000 !5. 2n #re#aring its ugust !1, 01 (ank reconciliation, Bing Cor#. has aaila(le the following infor'ation: Balance #er (ank state'ent, 83!131 $18,+50 ;e#osit in transit, 83!131 !,*00
!+. >resh, 2nc. had the following (ank reconciliation at Aarch !1, 01: Balance #er (ank state'ent, !3!131 $!,00 dd: ;e#osit in transit 10,!00 %,500 /ess: Hutstanding checks 1,+00 Balance #er (ooks, !3!131 $!%,*00 ;ata #er (ank for the 'onth of #ril 01 follow: ;e#osits $%!,00 ;is(urse'ents %*,00 ll reconciling ite's at Aarch !1, 01 cleared the (ank in #ril. Hutstanding checks at #ril !0, 01 totaled $+,000. >here were no de#osits in transit at #ril !0, 01. =hat is the cash (alance #er (ooks at #ril !0, 01) a. $5,00 (. $8,*00 c. $!1,00 d. $!5,500
Problem Entries for bad debt expense. 1. trial (alance (efore adust'ent included the following: ;e(it Credit ccounts receia(le $10,000 llowance for dou(tful accounts ales $510,000 ales returns and allowances 8,000
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Give ournal entries assuming that the estimate of uncollectibles is determined b! ta"ing #1$ %& of gross accounts receivable and #'$ 1& of net sales.
. >he trial (alance (efore adust'ent of
(nstructions a6 Pre#are the entries for esti'ated (ad de(ts assu'ing that dou(tful accounts are esti'ated to (e 16 +7 of gross accounts receia(le and 6 17 of net sales. (6 ssu'e that all the infor'ation a(oe is the sa'e, e?ce#t that the llowance for ;ou(tful ccounts has a de(it (alance of $,500 instead of a credit (alance. &ow will this di4erence a4ect the ournal entries in #art a6)
!. Pre#are ournal entries to record the following 'erchandising transaction of ;ean Co'#an, which a##lies the #er#etual inentor sste' . ;ean co'#an o4ers all of its credit custo'er credit ter' of 310, n3!0
4. Target Store uses the periodic inventory system and had the following transactions during the month of May:
Prepare the required ournal entries that )arget *tore must ma"e to record these transactions
5. A company made the following merchandise purchases and sales during the month of May:
>here was no (eginning inentor. 2f the co'#an uses the weighted aerage inentor aluation 'ethod and the #er#etual inentor sste', what would (e the cost of its ending inentor)
