BUS 214
1.
.
Determine the Adjusted or Actual Cash Balance from
Determine the Adjusted or Actual Cash Balance from
Balance per Bank Statement
Collection of Note Receivable for us by the Bank
Deposit in Transit
Interest Revenue Earned on bank balance
Outstanding Checks
3070 Bank Balance
2400 Deposit
1400 Outstanding
4070
4095
-10
1000
15
-1030
4070
Book balance
service charge
Note collected
Interest revenue
NSF check
CASH – BANK RECONCILIATION Given the information in Problem 1, what journal
entry, if any would you need to make in the General Journal?
Bank expense
10
Cash
10
Cash
1,000
Note receivable
1,000
Cash
15
Interest revenue
15
Accounts receivable
1,030
Cash
1,030
4.
Name .
Balance per General Ledger
Bank service charge
Collection of Note Receivable for us by the Bank
Deposit in Transit
Interest Revenue Earned on bank balance
Outstanding Checks
NSF check (the check was a payment from one of our customers)
CASH – BANK RECONCILIATION
the following information:
3,070
1,000
2,400
15
1,400
3.
Wed., Feb 18, 2015
CASH – BANK RECONCILIATION
the following information:
4,095
10
1,000
2,400
15
1,400
1,030
2.
Test No. 2
Bank expense
10
Accounts rec 1,030
Note rec
1,000
Int revenue
15
Cash
25
CASH – BANK RECONCILIATION Given the information from Problem 1, what balance
would you report on the balance sheet?
$___4,070___
5. ALLOWANCE FOR BAD DEBTS (AGING APPROACH) At year end, before any adjustments,
Toyota of Tucson had a $11,400 balance in Accounts Receivable and a $230 credit
balance in Allowance for Uncollectible Accounts. Toyota of Tucson ages its receivables
and adjusts the balance in Allowance for Doubtful accounts to correspond with the aging
schedule. Use the aging schedule for their accounts receivables which is shown below to
calculate the required balance for the Allowance for Uncollectible Accounts account.
6. Prepare the adjusting Journal Entry Toyota of Tucson needs to make.
7. What effect does the previous Journal Entry have on Net Income?
Journal Entry in Problem 6 have on reported Current Assets?
What effect does the
8. What amount should Toyota of Tucson report for Accounts Receivable in the current
asset section of their balance sheet?
1-30 days
31-60 days 61-90 days
over 91
8,000
0.5%
2,000
1.0%
400
5.0%
1,000
40.0%
40
20
20
400
5)
480
6)
Bad debt expense
Allowance for uncollectable accounts
7)
8)
11,400
estimated uncollectible
480 required balance
230 current balance
250 required adjustment
250
250
Net Income
$___250_______
increase no effect decrease
Current Assets
$____250______
increase no effect decrease
11,400
-480
10,920
less allowance for uncollectable accounts
accounts receivable at net realizable value
ALLOWANCE FOR BAD DEBTS (PERCENT OF SALES METHOD) Desert Honda ended the year with
an $80,000 balance in Accounts Receivable and an $18,000 credit balance in Allowance for
Uncollectible Accounts. Desert Honda had credit sales of $1,000,000 during the year and
collections on their accounts of $880,000 during the year.
9. Prepare the Journal Entry if Desert Honda estimates Uncollectible Accounts Expense as
1.5% of credit sales.
10. After making the entry in Problem 9, what balance for Accounts Receivable should
Desert Honda report on their balance sheet?
11. Prepare the Journal Entry when Desert Honda writes off John Doe’s account. John Doe
owes them $16,000.
12. What effect does the Journal Entry in Problem 11 have on Net Income?
What effect does if have on Current Assets?
9)
1.5% * 1,000,000 = 15,000
Bad debt expense
Allowance for uncollectible accounts
10)
80,000
33,000
47,000
15,000
15,000
less allowance for uncollectable accounts
accounts receivable at net realizable value
11)
allowance for uncollectible accounts
Accounts receivable
16,000
16,000
12)
Net Income
$____0______
increase no effect decrease
Current Assets
$____0______
increase no effect decrease
13. DAYS SALES IN ACCOUNTS RECEIVABLE Use the schedule shown below to calculate the
average collection period for 2014
sales
accounts receivable at 12/31
Average accounts receivable
Sales per day
2014
2013
35,137
3,725
30,761
3,261
(3,725 + 3,261) /2
35,137 /365
3,493
96.27
36.3 days
14. NOTES RECEIVABLE Prepare the journal entry on Aug. 31, 2014 when The Actg Co.
loans a customer $1,000 on a 9-month, 6% note.
15. Prepare the adjusting entry you would make on Dec. 31st.
Note receivable
Cash
Interest receivable
Interest revenue
1,000
1,000
20
1,000 * 6% * 4/12 = 20
20
16. INVENTORY Prepare the journal entry when BIG Co. sells merchandise costing $1,000
for $1,440 to Little Customer, on account.
Accounts receivable 1,440
Sales
Cost of goods sold 1,000
Inventory
1,000
1,440
17. INVENTORY Use the following information to calculate Cost of Goods Sold.
18. INVENTORY Use the following information to calculate Gross Profit.
Purchases
Purchase Discounts
Purchase Returns
2,780
20
40
Sales Revenue
Sales Returns
Net Sales
Inventory on 1/1
Purchases
Purchase Discounts
Purchase Returns
Available
Inventory on 12/31
Cost of goods sold
Gross Profit
Sales Revenue
Sales Returns
4,430
750
Inventory on 1/1
Inventory on 12/31
360
872
4,430
750
3,680
360
2,780
-20
-40
3,080
872
2,208
1,472
Use the following information to answer problems 19 through 20
 On Sep. 24th, Miller Motor Co. purchased a truck for inventory for $25,000, on account.
 On Oct. 17th MMC delivered the truck to customer who signed a note to pay $28,000
before the end of November.
 On Nov. 11th MMC received a $28,000 check from the customer
 On Dec. 25th MMC wrote a $25,000 check paying for the truck they purchased in
September.
19. In which month would MMC record Cost of Goods Sold
How much CoGS expense would they record?
20. In which month(s) would MMC record revenue
How much revenue would they record?
Sep Oct Nov Dec
25,000
Sep Oct Nov Dec
28,000
LIFO
units
cost
Inventory on Jan. 1st
1/3 purchase
1/12 purchase
1/24 purchase
available
10
20
9
24
63
1/30 SALE
50
FIFO
units
cost
Inventory on Oct. 1st
10/3 purchase
10/12 purchase
10/24 purchase
available
10
20
9
24
63
10/30 SALE
50
Average
units
$76.00
$81.00
$82.00
$85.00
$76.00
$81.00
$82.00
$85.00
cost
extended
760.00
1,620.00
738.00
2,040.00
5,158.00
0
17
9
24
50
$76.00
0.00
$81.00 1,377.00
$82.00
738.00
$85.00 2,040.00
4,155.00 Cost of goods sold
10
3
13
$76.00
$81.00
10
20
9
11
50
$76.00
760.00
$81.00 1,620.00
$82.00
738.00
$85.00
935.00
4,053.00 Cost of goods sold
0
13
13
$82.00
0.00
$85.00 1,105.00
1,105.00 Inventory
760.00
243.00
1,003.00 Inventory
extended
760.00
1,620.00
738.00
2,040.00
5,158.00
extended
21. INVENTORY Use LIFO to calculate both Cost of Goods Sold and Ending Inventory for the
data in the table. Clearly label your work.
22. INVENTORY Use FIFO to calculate both Cost of Goods Sold and Ending Inventory for the
data in the table. Clearly label your work.
23. INVENTORY Use Average Cost to calculate both Cost of Goods Sold and Ending
Inventory for the data in the table. Clearly label your work.
LIFO
FIFO
Average Cost
1/1
1/2
1/5
1/10
1/15
1/20
1/25
begin
A
SALE
purchase B
SALE
purchase C
SALE
purchase D
AVERAGE COST
`
A
10
-8
15
-12
15
-19
10
11
9.00
10.00
11.00
12.00
10
9.00
-8
9.00
new balance
2
B
15 10.00
new balance 17
average 9.88
-12
9.88
5
÷
90.00
15.00
120.00
15.00
180.00
15.00
285.00
150.00
A
10
9.00
8
9.00
72.00
A
B
2
15
9.00
10.00
12
10.00
120.00
A
B
C
2
3
15
9.00
10.00
11.00
1
3
15
9.00
10.00
11.00
9.00
30.00
165.00
204.00
A
B
C
D
1
0
0
10
9.00
10.00
11.00
12.00
165.00
120.00
525.00
90.00
-72.00
18.00
150.00
168.00
9.00
0.00
0.00
120.00
129.00
168.00÷17
-118.59 Cost of Goods Sold
49.41
24. INVENTORY Use Average Cost to calculate Cost of Goods Sold for the Jan 10th sale (only
the Jan. 10th sale).
25. PREPARE THE JOURNAL ENTRY to record the Jan. 10th sale.
26. INVENTORY Use LIFO to calculate Cost of Goods Sold for the Jan. 20th sale (only the
Jan 20th sale).
27. INVENTORY Use LIFO to calculate the Jan. 31 (or Jan 25) Inventory balance.
Average Cost
LIFO
for 2014
Sales
Cost of Goods Sold
1,825.00
1,460.00
for 2013
for 2012
1,545.88
1,314.00
1,391.29
1,182.60
as of 12/31/14 as of 12/31/13as of 12/31/12
Accounts receivable
Inventory
140.00
195.00
120.00
170.00
100.00
150.00
28. INVENTORY Calculate the Gross Profit Percentage for 2014.
1,825
-1,460
365 ÷ 1,825 = 0.20
29. INVENTORY Calculate inventory turnover for 2014.
CoGS
1,460 .
Ave Inventory = (170 + 195)/2
1,460
182.5
8.00
30. As of Dec. 31, 2014 Balboa Co.’s inventory had a recorded cost of $3,000. The
replacement cost (market value) for its inventory was $2,400, At what amount should
Balboa Co. report its inventory on the balance sheet?
$
2,400
Inventory
31. On Dec. 31, 2014, the replacement cost of Michael’s ending inventory was $12,000 and
its recorded cost was. $14,000. What amount should Michael’s report on their Dec. 31,
2012 balance sheet?
$
12,000
Inventory
Miller Motor Co.
Trial Balance
Trial Balance as of Dec. 31, 2014
Accounts payable
Accounts receivable
Accumulated depreciation
Accumulated depreciation
Building
Cash
Common stock
Depreciation expense
Dividends
Equipment
Income tax expense
Income tax payable
Miscellaneous expense
Retained earnings
Revenue
Salaries payable
Salary expense
Supplies
Supplies expense
Unearned revenue
32. Prepare an Income Statement, with proper
dating, from Miller Motor Co.’s trial balance.
380
382
60
140
250
198
100
30
65
100
35
35
13
193
330
5
177
2
4
13
1,256
1,256
33. Prepare a Balance Sheet, with proper dating,
from Miller Motor Co.’s trial balance. Do not be tricked
by the fact that I am not asking for a statement of
retained earnings.
Miller Motor Co.
Income Statement
for the month ending Oct. 31, 2012
Miller Motor Co.
Statement of Retained Earnings
for the month ending Oct. 31, 2012
Revenue
330
Retained Earnings on Oct. 1
Deprecition expense
Salary expense
Supplies expense
Miscellaneous expense
Operating expenses
30
177
4
13
224
Net Income
Dividends
Income before income tax
Income tax expense
Net income
106
35
71
Retained Earnings on Oct. 31
193
71
65
199
Miller Motor Co.
Balance Sheet
As of Jan. 31, 2010
Cash
Accounts receivable
Supplies
Current Assets
198
382
2
582
Accounts payable
Salary payable
Income tax payable
Unearned revenue
380
5
35
13
Building
Equipment
accumulated depreciation
Property, Plant & Equipment
250
100
200
150
Current Liabilities
Common stock
Retained Earnings
Stockholders's Equity
433
100
199
299
Total Assets
732
Liabilities + Stockholders' Equity
732