Click to BUY:

http://onlinehomework.guru/acc-422week-1/
ACC 422 Week 1
Exercise 7-2
Presented below are a number of independent situations.
For each individual situation, determine the amount that should be reported as cash.
1. Checking account balance $925,000; certificate of deposit $1,400,000; cash advance to
subsidiary of $980,000; utility deposit paid to gas company $180.

Cash balance

2. Checking account balance $600,000; an overdraft in special checking account at same bank as
normal checking account of $17,000; cash held in a bond sinking fund $200,000; petty cash fund
$300; coins and currency on hand $1,350.

Cash balance

3. Checking account balance $590,000; postdated check from a customer $11,000; cash restricted
due to maintaining compensating balance requirement of $100,000; certified check from customer
$9,800; postage stamps on hand $620.

Cash balance

4. Checking account balance at bank $37,000; money market balance at mutual fund (has checking
privileges) $48,000; NSF check received from customer $800.

Cash balance

5. Checking account balance $700,000; cash restricted for future plant expansion $500,000; shortterm Treasury bills $180,000; cash advance received from customer $900 (not included in checking
account balance); cash advance of $7,000 to company executive, payable on demand; refundable
deposit of $26,000 paid to federal government to guarantee performance on construction contract.

Cash balance

Exercise 7-4
Your accounts receivable clerk, Mitra Adams, to whom you pay a salary of $1,500 per month, has
just purchased a new Acura. You decided to test the accuracy of the accounts receivable balance of
$82,000 as shown in the ledger.
The following information is available for your first year in business.

(1
)

Collections from
customers

(2
)

Merchandise
purchased

(3
)

Ending merchandise
inventory

(4
)

Goods are marked to

sell at 40% above cost

$198,000

320,000

90,000

Compute an estimate of the ending balance of accounts receivable from customers that should
appear in the ledger and any apparent shortages. Assume that all sales are made on account.

The ending balance of accounts receivable from customers

Apparent shortage

Exercise 7-8
At the end of 2014, Aramis Company has accounts receivable of $800,000 and an allowance for doub
2015, Aramis Company determined that its receivable from Ramirez Company of $6,000 will not be c
write-off.

Prepare the journal entry for Aramis Company to write off the Ramirez receivable. (If no entry is
account titles and enter 0 for the amounts. Credit account titles are automatically indented when
manually.)
Date

January 16, 2015

SHOW LIST OF ACCOUNTS

LINK TO TEXT

Account Titles and Explanation

What is the net realizable value of Aramis Companys accounts receivable before the write-off of t

Net realizable value

Exercise 7-9
The trial balance before adjustment of Reba McIntyre Inc. shows the following balances.

Dr.

Accounts
Receivable

Allowance for
Doubtful
Accounts

Sales Revenue
(all on credit)

Cr.

$90,000

1,750

$680,000

Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful
accounts on the basis of (a) 4% of gross accounts receivable and (b) 1% of net sales. (If no entry is
required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account
titles are automatically indented when the amount is entered. Do not indent manually.)

No.

(a)

Account Titles and Explanation

Debit

Credit

(b)

Exercise 7-13
On April 1, 2014, Rasheed Company assigns $400,000 of its accounts receivable to the Third Nationa
due July 1, 2014. The assignment agreement calls for Rasheed Company to continue to collect the rec
finance charge of 2% of the accounts receivable, and interest on the loan is 10% (a realistic rate of inte

Prepare the April 1, 2014, journal entry for Rasheed Company. (If no entry is required, select "No
for the amounts. Credit account titles are automatically indented when the amount is entered. D
Date

Account Titles and Explanation

April 1, 2014

Prepare the journal entry for Rasheeds collection of $350,000 of the accounts receivable during the
period from April 1, 2014, through June 30, 2014. (If no entry is required, select "No Entry" for
the account titles and enter 0 for the amounts. Credit account titles are automatically
indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

Exercise 7-16
Beyonc Corporation factors $175,000 of accounts receivable with Kathleen Battle Financing, Inc.
on a with recourse basis. Kathleen Battle Financing will collect the receivables. The receivables
records are transferred to Kathleen Battle Financing on August 15, 2014. Kathleen Battle Financing
assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount

equal to 4% of accounts receivable to cover probable adjustments.

(b)
Assume that the conditions are met for the transfer of receivables with recourse to be accounted for
as a sale. Prepare the journal entry on August 15, 2014, for Beyonc to record the sale of
receivables, assuming the recourse liability has a fair value of $2,000. (If no entry is required,
select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are
automatically indented when the amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

August 15, 2014

Exercise 8-3
Assume that in an annual audit of Harlowe Inc. at December 31, 2014, you find the following
transactions near the closing date.
Assuming that each of the amounts is material, state whether the merchandise should be included in
the clients inventory.

Transactions

1.

A special machine, fabricated to order for

a customer, was finished and specifically
segregated in the back part of the
shipping room on December 31, 2014.
The customer was billed on that date and
the machine excluded from inventory
although it was shipped on January 4,
2015.

2.

Merchandise costing $2,800 was received

on January 3, 2015, and the related
purchase invoice recorded January 5. The
invoice showed the shipment was made
on December 29, 2014, f.o.b. destination.

3.

A packing case containing a product

costing $3,400 was standing in the
shipping room when the physical
inventory was taken. It was not included
in the inventory because it was marked
Hold for shipping instructions. Your
investigation revealed that the customers
order was dated December 18, 2014, but
that the case was shipped and the
customer billed on January 10, 2015. The
product was a stock item of your client.

4.

Merchandise received on January 6,

2015, costing $680 was entered in the
purchases journal on January 7, 2015.

The invoice showed shipment was made

f.o.b. suppliers warehouse on December
31, 2014. Because it was not on hand at
December 31, it was not included in
inventory.

5.

Merchandise costing $720 was received

on December 28, 2014, and the invoice
was not recorded. You located it in the
hands of the purchasing agent; it was
marked on consignment.

Exercise 8-13
Inventory information for Part 311 of Monique Aaron Corp. discloses the following information for th

June 1

Balance

300 units @ $10

June 10

11

Purchased

800 units @ $12

15

20

Purchased

500 units @ $13

27

Assuming that the periodic inventory method is used, compute the cost of goods sold and ending i
(1)
LIFO

Cost of Goods Sold

Ending Inventory

LINK TO TEXT
LINK TO TEXT

Assuming that the perpetual inventory method is used and costs are computed at the time of each w
inventory at LIFO?

The ending inventory at LIFO

Assuming that the perpetual inventory method is used and costs are computed at the time of each
withdrawal, what is the gross profit if the inventory is valued at FIFO?

Gross Profit (FIFO)