ACC 111, Principles of Accounting I
Group Project I for Chapters 7 and 8
Instructor: Mark Johnston
Names ______________________________
Problem 1, Chapter 7 (45) points
Supreme Company’s bookkeeper prepared the bank reconciliation for May 31, 2003. The bookkeeper had
the following responsibilities: All bookkeeping, the handling of cash receipts, the preparation of the
monthly bank reconciliation and the deposit at the bank. Assume that the bookkeeper prepared all of the
checks which were signed by the owner. The owner, on a daily basis verified and signed all checks that were
written, counted all cash and verified the debit to cash receipts journal and the credit to cash in the cash
payments journal.
May 31 Bank Statement
Balance of previous bank statement on 4/30
Six deposits and other credits totaling
Eleven checks and other debits totaling
Current balance as of this statement
$ 12, 760
7,596
4,977
$ 15, 379
Checking Account Transactions – From Bank Statement
Date
5/1
5/2
5/5
5/14
5/21
5/28
5/28
5/31
5/31
Amount
$ 915
$ 1,000
$ 737
$ 850
$ 729
$ 815
$ (581)
$ (11)
$ 2,550
Trans. Type
Deposit
Deposit
Deposit
Deposit
Deposit
Deposit
NSF Check
Service Charge
Cr Memo
Date
5/1
5/1
5/2
5/3
5/4
5/13
5/17
5/27
5/28
5/29
5/31
Ck. No
386
387
388
392
394
398
399
400
401
402
403
Amount
$ 125
$ 112
$ 500
$ 215
$ 100
$ 750
$ 1,000
$ 543
$ 450
$ 175
$ 415
Document1
SEE DUPLICATE DEPOSIT SLIPS –PAGE 2
(Collection on note, principal $2,500)
SEE CARBON COPY OF CHECKS ISSUED PAGES 3-5
Page 1
Deposit Slip
Date
4/30/03
Currency
Coins
List of Checks
Gilly
Date
5/1/03
Deposit Slip
Date
5/4/03
Deposit Slip
Date
5/13/03
Document1
Date
5/20/03
915
00
915
00
Currency
Coins
List of Checks
Jones
750
00
Deposit Slip
250
00
Date
5/27/03
Total
1000
00
Currency
Coins
List of Checks
Slade
156
00
Deposit Slip
581
00
Date
5/31/03
Total
737
00
Currency
Coins
List of Checks
Luce
500
00
350
00
Total
850
00
Total
Deposit Slip
Deposit Slip
Cash
Cash
Cash
Cash
Cash
Currency
Coins
List of Checks
Pyle
600
00
129
00
729
00
Currency
Coins
List of Checks
Dudley
445
00
370
00
Total
815
00
Total
Page 2
Cash
Cash
Currency
Coins
List of Checks
Gilly
0
00
915
00
Total
915
00
Carbon copy of all checks issued between 4/15/03 to 5/31/03
 = Check Was Paid in April
Date
Supreme Company
Pay to the Order of
4/15/03
386
Jones & Company
$
125.00
One Hundred Twenty-Five and
NBT BANK
Memo
Supplies
Supreme Company
Pay to the Order of
no cents
Date
4/22/03
Jones & Company
$
229.00
Two hundred twenty-nine and
NBT BANK
Memo
Supplies
Jill Supreme
390
no cents
Jill Supreme

Date
Supreme Company
Pay to the Order of
4/17/03
Jordon
387
$
One hundred twelve and
NBT BANK
Jill
Memo
Invoice 2324
Supreme Company
112.00
no cents
Supreme
Pay to the Order of
Date
4/22/03
Jordon
391
$
331.00
Three hundred thirty-one and
no cents
NBT BANK
Jill Supreme
Memo
Invoice 2340

Date 4/21/03
Supreme Company
Pay to the Order of
Jones & Company
388
$
Five Hundred and
NBT BANK
Memo
Invoice 5132
Supreme Company
Pay to the Order of
500.00
4/21/03
King & Company
389
$
4/24/03
King & Company
570.00
Date
215.00
no cents
4/25/03
Jill Supreme
393
$
Four hundred fifty and
NBT BANK
Memo
Drawing
Page 3
$
Jill Supreme
Pay to the Order of
no cents
Jill Supreme
392
Two hundred fifteen and
Supreme Company

Document1
Date
NBT BANK
Memo
Invoice 700
Jill Supreme
Date
Pay to the Order of
no cents
Five Hundred Seventy and
NBT BANK
Memo
Invoice 678
Supreme Company
415.00
no cents
Jill Supreme

Carbon copy of all checks issued between 4/15/03 to 5/31/03
 = Check Was Paid in April
Date
Supreme Company
Pay to the Order of
4/28/03
Jones & Company
394
$
100.00
One Hundred and
NBT BANK
Memo
Invoice 2360
Pay to the Order of
Date
4/29/03
Parton
$
4/30/03
Carr Office Supplies
Date
Pay to the Order of
no cents
750.00
no cents
5/12/03
Jill Supreme
399
$
One Thousand and
NBT BANK
Memo
Withdrawal
Jill Supreme
$
Jill Supreme
Supreme Company
150.00
398
Seven hundred fifty and
NBT BANK
Memo
Invoice 870
395
One hundred fifty and
NBT BANK
Memo
Invoice 5002
Pay to the Order of
no cents
Jill Supreme
Supreme Company
Date
Supreme Company
1,000.00
no cents
Jill Supreme

Supreme Company
Pay to the Order of
Date 4/30/03
Al Kazam leisure Man
396
$
Five Hundred fourteen and
NBT BANK
Memo
Invoice 010
Supreme Company
Pay to the Order of
514.00
4/30/03
Jones International
$
5/20/03
Hooyah
400
$
543.00
Five hundred forty-three and
no cents
NBT BANK
Jill Supreme
Memo
Invoice 571
397
Supreme Company
771.00
Seven hundred seventy-one and
no cents
NBT BANK
Jill Supreme
Memo
Invoice 556
Document1
Pay to the Order of
Date
no cents
Jill Supreme
Date
Supreme Company
Page 4
Pay to the Order of
Date
5/22/03
King & Company
Four hundred fifty and
NBT BANK
Memo
Invoice 556
401
$
450.00
no cents
Jill Supreme
Carbon copy of all checks issued between 4/15/03 to 5/31/03
Date
Supreme Company
Pay to the Order of
5/24/03
Utility Company
402
$
175.00
One hundred seventy-five and
no cents
NBT BANK
Jill Supreme
Memo
May Electric bill
Date
Supreme Company
Pay to the Order of
5/27/03
Ollyoop
403
$
Four hundred fifteen and
NBT BANK
Memo
Invoice 5002
Date
Pay to the Order of
5/28/03
Gardiner Co.
$
no cents
Jill Supreme
Supreme Company
Pay to the Order of
Date
5/30/03
Father and Sons
405
$
One hundred sixty and
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300.00
160.00
no cents
Jill Supreme
Page 5
5/31/03
Thomson Learning
406
$
Five hundred fourteen and
NBT BANK
Memo
books
514.00
no cents
Jill Supreme
Date
Supreme Company
Pay to the Order of
5/31/03
Ollyoop
407
$
Eight hundred and
NBT BANK
Memo
Invoice 5020
404
Three hundred and
NBT BANK
Memo
Invoice 444
Pay to the Order of
no cents
Jill Supreme
Supreme Company
NBT BANK
Memo
Invoice 123
415.00
Date
Supreme Company
800.00
no cents
Jill Supreme
Cash Receipts Recorded
in Cash Receipts Journal
Date
5/1
5/4
5/9
5/13
5/20
5/27
5/31
$
$
$
$
$
$
$
$
Cash Debit
1,000
737
1,285
850
729
815
915
6,331
Cash Payments Recorded
In Cash Payments Journal
Check No.
398
399
400
401
402
403
404
405
406
407
*JS
*JS
*JS
*JS
*JS
*JS
*JS
See duplicate deposit slips on page 2.
See duplicate carbon copies of checks on
pages 3 through 5.
Cash Credit
$
750
$
1,000
$
345
$
450
$
175
$
415
$
300
$
160
$
514
$
800
$
4,909
* Assume that all cash receipts were counted by owner-Jill Supreme, and she verified the debit in the cash receipts
journal and the bookkeeper deposited in bank on the same day.
* Assume that all deposits cleared the bank the day after they were recorded in the cash receipts journal and deposited.
(i.e. 5/4 deposit cleared on 5/5 – see page 1). Assume that any cash receipt that did not clear the bank by the next day
was never deposited in the bank.
Cash General Ledger
Date
4/30
5/31
5/31
Explanation
Debit
Balance
Cash Receipts 6,331
Cash Payments
Credit
Balance
11,338
4,909
12,760
Balance
The NSF check returned with the bank statement was received from customer, Pat Slade in payment of his accounts receivable.
The NSF check has not been recorded in the general ledger.
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Page 6
The following is the bank reconciliation prepared by the bookkeeper for April 30, 2003.
April 30, 2003
Cash balance according to bank statement
Add: Additions by depositor not on bank
statement 4/30
$12, 760
915
915
$13,675
Deductions by depositor not on bank statement
Outstanding checks:
386
$125
387
112
388
500
392
215
394
100
396
514
397
771
Adjusted balance
Document1
Cash balance according depositors records
Add:
Additions by bank not recorded by depositor
Proceeds from collection of notePrincipal
Interest
Error in recording check 389
$2,500
50
180
Deductions by bank not recorded by
depositor: Check returned NSF
Bank Service Charge
581
11
2,337
$ 11,338
Page 7
$9,200
2,730
$11,930
$ 592
Adjusted balance
$ 11,338
.
May 31, 2003
Cash balance according to the bank statement
Additions by depositor not on bank
statement 5/31
$ 15,379
915
915
$ 16, 294
Cash balance according depositors records
Add: Additions by bank not recorded by depositor
Proceeds from collection of note Principal
Interest
$ 12,760
$ 2,500
50
2,550
$ 15,310
Deductions by depositor not on bank statement
Outstanding checks
No. 404
No. 405
No. 406
No. 407
Deductions by bank not recorded by depositor:
Check returned NSF
Bank service charge
Error in recording check 400
300
160
514
800
581
11
198
$ 790
1,774
Adjusted balance
Required: 1.
2.
3.
Document1
$ 14,520
Adjusted balance
$14,520
Review the Bank Reconciliation prepared by your employee on May 31 above and prepare a corrected bank
reconciliation.
Explain why you think your corrected bank reconciliation does not balance. How did the employee conceal the
embezzlement? Recommend any improvements to internal controls to prevent this discrepancy from occurring
again.
Record all required journal entries for May 31, 2003 related to the bank reconciliation including a journal entry
for the bank reconciliation discrepancy. Assume the bank reconciliation discrepancy was a result of
embezzlement by the employee preparing the bank reconciliation. Assume the embezzlement was never
recovered.
Page 8
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Page 9
Problem 2 (30) points
The transactions, adjusting entries, and closing entries described below are related to uncollectible accounts for the
Summer Company. All were completed during the current year ended December 31, 2002. Other transactions
affecting accounts receivable are shown in the Accounts Receivable General Ledger (T) account. See page below.
Jan. 30
Recovered the account of C.L. Linke and Sons that had been written off in the preceding year and
received $1,250 cash in full payment.
June 27
Wrote off the $2,375 balance owed by Miller Corp., which has no assets.
Oct. 5
Received 25% of the $12,000 balance owed by F.M. Knox Co., a bankrupt, and wrote off the
remainder as uncollectible.
Dec. 31
Based on an analysis of the $257,724 of accounts receivable, it was estimated that $14,500 will be
uncollectible. Record the adjusting entry. Record the adjusting entry using the Aging method.
Dec. 31
Record the entry to close the appropriate account into income summary.
Required:
1. Open the following selected accounts recording the opening balances as of January 1 of the
current year. (see below )
114.1
313
718
Allowance for doubtful accounts
Income summary
Uncollectible accounts expense
12,200 Credit
_______________
_______________
2. Record in general journal form the transactions and the adjusting and closing entries described
above. After each entry, post to the three selected accounts above and to the accounts receivable and
enter the ending balances. (Page 10 and 11)
3. Determine the expected realizable value of the accounts receivable as of December 31.
4. Compute the accounts receivable turnover and the number of days sales in receivables for the
year. Assume that all sales are on account. Show your computations. How is Summer Company
doing with collection compared to the industry, assuming the industry average is an accounts
receivable turnover of 11 and a number of days in receivables is 37 days?
Accounts Receivable A/C 114
1/1 bal.
(1)
172,099
1,800,000
Allow. For Uncollectible A/C’S 114.1
1/1 Bal.
1,700,000.0 (2)
1. Represents all of the sales on account for the year.
2. Represents other collections from customers on account for
the year.
Income Summary A/C 313
Document1
Uncollectible A/C Expense A/C 718
Page 10
Journal
Date
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Description
Post
Ref.
Debit
Credit
1
1
2
2
3
3
4
4
5
5
6
6
7
7
8
8
9
9
10
10
11
11
12
12
13
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28
29
29
30
30
31
31
Page 11
Problem 3 (25) points
Apr 1 07 Accepted a $20,000, one-year, 8% note dated April 1 from Bruce Hanson for the sale of inventory; Cost
of Goods Sold was $16,500.
Dec 31 07 Record the adjusting entry for interest accrued on the Bruce Hanson note
Dec. 31 07 Record the entry to close the appropriate account into income summary.
Apr 01 08 Bruce Hanson dishonored the note dated April 1, 2007.
May 01 08 Received from Bruce Hanson the amount owed on the dishonored note, plus interest for
30 days at 10% computed on the maturity value of note.
Oct. 20 08 Loaned $8,000 cash to Bower Company and accepted a $8,000, 60-day, 9% note dated October 20.
Dec 19 08 Received from Bower Company the amount owed on October 20 note.
Required: Record the above transactions in general journal form. (Show your computations)
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Page 12
Journal
Date
Document1
Description
Post
Ref.
Debit
Credit
1
1
2
2
3
3
4
4
5
5
6
6
7
7
8
8
9
9
10
10
11
11
12
12
13
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28
29
29
30
30
31
31
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