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Problem#1 – (20 Points)
Sav Rocca, accountant for Shine King Cleaning is attempting to reconcile the monthly bank account. Sav Rocca has the following information:
1) The cash ledger balance at
Nov
ember 30 is
$73,100
2) The balance according to the bank statement is
$73,723
3) Deposits in transit totaled $
900
4) Outstanding checks Check #104 – $500 & Check #107 – $
600
5) Bank service charges were $18
6) The bank collected an EFT collection of $600 for Shine King Cleaning on account from Pierre’s Wig Stand
7) Earned interest at the bank $
16
8) Shine King Cleaning made EFT payments Check Art Supplies $30 & Calpine Energy $145.
1. Prepare bank reconciliation at November 30 (15 Points)
Bank Balance:
Book Balance:
Add: Deposit in transit
Deduct: Bank Service Charge
-18
Deduct: Checks Paid
-500
Add: Funds Received
-600
Add:
Interest
Earned
Deduct: Payment Art Supplies
-30
Deduct: Payments to Calpine Energy
-145
Adjusted/Corrected Balance per Bank
$73,523
Adjusted/Corrected Balance per Book
$73,523
Problem #1 continued
2) Prepare the necessary journal entries (5 Points)
|
GENERAL JOURNAL |
|||||||||||||||||||||||||
|
DATE |
DESCRIPTION |
REF |
DEBIT |
CREDIT |
|||||||||||||||||||||
Problem #2- (15 Points)
Prepare journal entries for the following petty cash transactions of Bob’s Lawn Service:
1) Established a $200 petty cash fund (5 points)
| Journal Entry | ||||||
|
ACCOUNTS AND EXPLANATIONS |
POST. REF. |
|||||
| Nov |
14 |
Petty Cash |
200.00 |
|||
| 14 |
2) Replenish the petty cash fund. The fund contained the following: $77 in cash, receipts for $45 in lawn supplies purchased, receipts for $11 in fuel costs purchased, and a $17 receipt for entertainment expenses (10 points)
| Cash |
77.00 |
||
|
Lawn Supplies |
45.00 |
||
|
Fuel |
11.00 |
||
|
Entertainment |
17.00 |
||
|
73.00 |
Problem #3 (10 Points)
Stover Co. loaned cash to Elam Co. on November 1 in exchange for a 90 day, 9% note – valued at $
110,000
.
Use 360 day/year.
a) Determine the maturity date of the note. (2 points) Jan 29
Days in note 90 Issue Date 11/
01
/12
Days of Note from Issue Date – December 31st 61
Days of Note from January 1st – Expiration Date 29
b) Prepare all necessary journal entries for Stover. (8 points)
1. Initial journal entry to record the note receivable
|
Nov |
01 | 110,000 | ||
|
Notes Payable |
2. Year-end entry to record interest earned
| Interest |
2475 |
3. Final entry to show note paid
Problem #4 – (10 Points)
On December 31, 2008, Hassel’s Construction had the following account balances:
Accounts Receivable $2,700,000
Allowance for Uncollectible Accounts (before adjustment) $442,000
Sales Revenue (80% on account) $6,700,000
Prepare the entry to estimate bad debts assuming Hassel bases it on 2% of credit sales.
DATE
DESCRIPTION
REF
DEBIT
CREDIT
Problem #5 – (10 points)
On December 31, 2012, BMW Auto Parts prepares an aging schedule of accounts receivable, and listed below is a summary of the results.
The balance in the Allowance account prior to adjustment was $1750. BMW Auto Parts uses the aging approach of accounting for uncollectible accounts.
a) Calculate the Amount Uncollectible (4 points)
Percentage Amount
Days Outstanding Amount Uncollectible Uncollectible
Not yet due $350,000 .5%
31-60 days past due 75,000 3%
61-90 days past due 50,000 10%
91-120 days past due 25,000 20%
Over 120 days past due 3,500 30%
Balance ____________
Balance in Allowance account prior to adjustment ____________
Adjusted Balance in Allowance account ____________
b) Prepare the adjusting entry required at the end of the accounting period (6 points)
DATE
DESCRIPTION
REF
DEBIT
CREDIT
