You are on page 1of 20

1

Fall 2011 ACCT 201 Exam 2 Review


Professor Quimina
October 19, 2011
Circle the letter of the best response.

1. The Inventory account has a debit balance oI $30,000 on December 31. A physical count reveals that the
merchandise on hand is $29,000. The entry to adjust the inventory on December 31 would include a:
A. credit to Cost oI Goods Sold d $1,000.
B. credit to Inventory, $1,000.
C. credit to Accounts Payable, $1,000.
D. credit to Retained Earnings, $1,000.
2. Two categories oI expenses in all merchandising companies are:
a. cost oI goods sold and Iinancing expenses
b. operating expenses and sales
c. cost of goods sold and operating expenses
d. sales and cost oI goods sold.


Table 5-1
Selling expenses ........................................................................ $ 20,000
Cost oI goods sold ....................................................................... 160,000
Sales ........................................................................................... 245,000
General expenses .......................................................................... 40,000
Interest expense ............................................................................... 2,000
Sales returns and allowances ........................................................... 5,000

3. ReIer to Table 5-1. On a multi-step income statement, operating income is:
A. $25,000.
B. $20,000.
C. $18,000.
D. $85,000.

4. Sales revenue less cost oI goods sold is called:
a. gross profit
b. net proIit (loss)
c. operating expense
d. net sales.


5. Would Gross ProIit, Operating Income, and Net Income appear on a single-step income statement?
Gross ProIit Operating Income Net Income
A. No No Yes
B. Yes Yes Yes
C. No Yes Yes
D. Yes No No



2

6. The primary diIIerence between a periodic and perpetual inventory system is that a periodic system:
a. keeps a record showing the inventory on hand at all times
b. provides better control over inventories
c. records the cost oI the sale on the date the sale is made
d. determines the inventory on hand only at the end of the accounting period.

7. Under a perpetual inventory system, acquisition oI merchandise Ior resale is debited to:
a. the Inventory account
b. the Sales account
c. the Supplies account
d. the Cost oI Goods Sold account.

8. Freight costs incurred by a seller on merchandise sold to customers will cause an increase:
a. in the selling expenses oI the buyer
b. in operating expenses for the seller
c. to the cost oI goods sold oI the seller
d. to a discount received account oI the seller.


Hermione Co. reported the Iollowing inIormation:
Table 6-1
Units Unit Cost Total Cost Units Sold
Beginning inventory (Jan. 1) 4 $400 $1,600
Sale (Mar. 1) 3
Purchase (Apr. 15) 4 405 1,620
Sale (June 22) 3
Purchase (Oct. 11) 2 425 850
Total
Units in ending inventory
10
4
$4,070 6

9. ReIer to Table 6-1. Assume that Hermione uses perpetual LIFO. The cost of the ending inventory is:
A. $1,700
B. $1,670
C. $1,655
D. $1,600

10. ReIer to Table 6-1. Assume that Hermione uses perpetual FIFO. The entry to record the March 1 credit sale at a
sale price oI $800 per unit would include all oI the Iollowing except:
A. credit Inventory, $2,400.
B. debit Cost oI Goods Sold, $1,200.
C. debit Accounts Receivable, $2,400.
D. credit Sales Revenue, $2,400.

11. ReIer to Table 6-1. Assume that Hermione uses periodic FIFO. The cost of goods sold Ior the period is:
A. $2,470
B. $2.410
C. $1,660
D. $1,600





12. In a period oI rising prices, which method will yield the highest net income, lowest inventory cost, and lowest
3
amount oI income taxes?
ighest Lowest Lowest
Net income Inventory Income Taxes
A. LIFO LIFO LIFO
B. FIFO LIFO FIFO
C. FIFO LIFO LIFO
D. LIFO FIFO LIFO

13. The appropriate value Ior inventory on the balance sheet is:
A. the sale price.
B. the cost determined by using LIFO, FIFO, average cost, or speciIic unit cost.
C. market value.
D. B or C, whichever is lower.

14. An understatement oI the ending inventory in 20X1 will have the Iollowing eIIects on cost oI goods sold and net
income in 20X1:
Cost of
Goods Sold Net Income
A. overstate understate
B. overstate overstate
C. understate overstate
D. understate understate

15. The Sales Returns and Allowances account is classiIied as a(n):
a. asset account
b. contra asset account
c. expense account
d. contra revenue account

16. Which oI the Iollowing would not be Iound in a company that has an eIIective system oI internal controls?
A. The person who signs checks and makes deposits also reconciles the bank statement each month.
B. Every employee is required to take a regular vacation time each year while another employee perIorms
her job.
C. One employee is responsible Ior actual physical control over the inventory while a diIIerent employee
enters inventory inIormation in the computer.
D. All checks and receipts are prenumbered and missing numbers are investigated.


17. Each oI the Iollowing is a Ieature oI internal control except
a. an extensive marketing plan
b. saIeguard its assets Irom theIt
c. separation oI duties
d. recording oI all transactions

18. Which oI the Iollowing is not a limitation oI internal control?
a. cost of establishing control procedures should not exceed their benefit
b. the human element
c. collusion
d. the size oI the company


19. When two or more people get together Ior the purpose oI circumventing prescribed controls, it is called
a. a Iraud committee
4
b. collusion
c. a division oI duties
d. bonding oI employees


20. While preparing the bank reconciliation Ior March, the accountant Ior Oliver & Company discovered that a $654
check in payment oI an account payable had been entered incorrectly in the journal as $645. Which oI the Iollowing
statements is true?
A. An adjusting entry must be made to debit Accounts Payable and credit Cash for $9.
B. An adjusting entry must be made to debit Cash and credit Accounts Payable Ior $9.
C. The bank should be notiIied and the bank balance corrected by adding $9.
D. No adjusting entry is needed Ior this reconciling item because it appears on the bank side oI the
reconciliation.

21. Which one oI the Iollowing is not an objective oI a system oI internal controls?
a. SaIeguard company assets
b. Overstate liabilities in order to be conservative
c. Enhance the accuracy and reliability oI accounting records
d. Reduce the risks oI errors

22. Good internal control over cash receipts would include which oI the Iollowing?
A. A cash register receipt is given to every customer; each sale is rung up on the cash register.
B. All incoming mail is opened by the mailroom employee who prepares a tape oI all cash receipts received
each day.
C. A Iidelity bond covers all employees who handle cash.
D. All of the above are good internal controls over cash receipts.

23. Which oI the Iollowing is not an element oI internal control over cash payments?
A. Checks are prenumbered in sequence to account Ior all payments and disbursements.
B. The purchasing department is responsible for signing all checks in payment of purchases of
merchandise.
C. External auditors examine internal controls over cash payments to determine whether the accounting
system produces accurate measurements Ior items related to cash disbursements.
D. Paid invoices are punched, stamped, or otherwise voided to prevent duplicate payment.

The Data Co. has asked you to assist in the preparation oI a bank reconciliation at the end oI July. Answer questions 24-
26 using the Iollowing code letters to indicate how the item described would be reported on the bank reconciliation.

A. Add to the bank statement balance
B. Deduct Irom the bank statement balance
C. Add to the book balance
D. Deduct Irom the book balance
E. Does not belong on the bank reconciliation

24. C Note and interest collected by the bank Ior the company, $500 (plus $25 interest)
25. A Deposit in transit, $400.
26. B Check no. 662 Ior written Ior $730 was incorrectly recorded by the bank as $370.





27. The method being used to determine the amount oI the allowance Ior doubtIul debts that relies on a schedule in
which customers balances are classiIied by the length oI time they have been unpaid, is known as the
5
a. direct write-oII method
b. net realisable method
c. aging of accounts receivable method
d. conservatism method

28. Under the direct write-oII method, when a particular account is considered to be uncollectible, the loss is
charged to
a. revenue
b. accounts receivable
c. allowance Ior doubtIul debts
d. uncollectible account expense

29. A petty cash Iund has been established Ior $200. A count oI the petty cash Iund at the end oI the month reveals
that there is $44 in the Iund and petty cash tickets Ior the Iollowing amounts:
Postage Expense $ 75
OIIice Supplies 42
Delivery Expense 39

The journal entry to replenish the petty cash Iund would be:
A. Petty Cash 156
Cash 156

B. Office Supplies 42
Delivery Expense 39
Postage Expense 75
Cash 156

C. Cash 160
Petty Cash 160

D. Cash 44
Petty Cash 44



30. Which oI the Iollowing is not a reasonable internal control over receivables:
A. The credit department should not be allowed to handle cash Irom customers.
B. The person receiving cash should post the collections to accounts receivable records as soon as the
cash is received.
C. Customers should have a credit check run beIore they are allowed to purchase on credit.
D. All oI the above are reasonable controls over receivables.


6
31. On 7/7/X4 a 5, 90 day, $2,600 note receivable is accepted Irom a customer Ior the sale oI Iarm equipment.
Which oI the Iollowing is correct?
Due Date Maturity Value
A. 10/4/X4 $2,600.00
B. 10/5/X4 $2,730.00
C. 10/5/X4 $2,632.50
D. 10/6/X4 $2,632.50

32. Suppose that Opticals Co. uses the direct write-oII method to record uncollectible-account expense. Which oI the
Iollowing statements is (are) correct?

I. The correct entry includes a debit to Allowance Ior Uncollectible Accounts.
II. The correct entry includes a debit to Uncollectible-Account Expense.
III. The correct entry includes a credit to Accounts Receivable.
IV. The correct entry includes a debit to Accounts Receivable.
A. Only I is correct.
B. Only II is correct.
C. Both II and IV are correct.
D. Both II and III are correct.

33. Which oI the Iollowing statements related to receivables is Ialse?
A. On the balance sheet, accounts receivable are usually reported as total accounts receivable minus the
allowance Ior uncollectible accounts.
B. A dishonored note receivable should be shown as a current liability.
C. When a note receivable is not paid at maturity, the principal plus any interest due should be charged back
to the customer`s account receivable.
D. Days sales in receivables measures the average collection period oI the company`s receivables.

Table 5-1
On December 31, 20s1, Troy Inc., had the Iollowing accounts and balances (beIore adjustment) on its books:
Accounts Receivable $ 80,000
Allowance Ior DoubtIul Accounts 2,000 (credit balance)
Net Sales 500,000

34. ReIer to Table 5-1. Troy estimates that its Bad Debt Expense is 2 oI Net Sales. The Uncollectible-Account
Expense Ior 20x1 should be:
A. $10,000. C. $8,000.
B. $12,000. D. $1,600.

35. ReIer to Table 5-1. Troy uses an aging schedule to estimate its uncollectible accounts. The aging schedule and
the percentage oI each category that is estimated to be uncollectible is given below:
Current $40,000 2
1-30 days past due 30,000 10
Over 30 days past due 10,000 40
The balance in the Allowance Ior DoubtIul Accounts aIter adjustment should be:
A. $2,000. B. $5,800. C. $7,800. D. $9,800.

7
36. Martinez Co. paid Acme Co. Ior merchandise with a $2,000, 90-day, 8 note dated April 1. II Martinez pays oII
the note at maturity, what entry should Acme make on its books at that time?
A. Cash 2,160
Notes Receivable 2,160
B. Notes Payable 2,000
Interest Expense 160
Cash 2,160
C. Cash 2,040
Notes Receivable 2,000
Interest Revenue 40
D. Cash 2,160
Notes Receivable 2,000
Interest Revenue 160

37. Which accounts would be debited and credited in the entry to record accrued interest on a note receivable?
Debit Credit
A. Interest Revenue Interest Receivable
B. Interest Receivable Interest Revenue
C. Cash Interest Revenue
D. Interest Receivable Cash

8
Problem 1. The adjusted trial balance of Pratt Company contained the following
information:
Debit Credit

Cash $ 16200
Prepaid Iilm rental .............................................................. 28,000
Land ................................................................................... 100,000
Investment in stock and Bonds (long-term)....... 60,000
Note Receivable.................. 50,000
Building .............................................................................. 130,000
Accumulated depreciation: building .................................... $ 16,000
Fixtures and equipment ....................................................... 12,000
Accumulated depreciation: Iixtures and equipment ............. 3,000
Notes payable. ................................................................. 190,000
Accounts payable ................................................................ 40,200
Income taxes payable .......................................................... 6,100
Common Stock ................................................................... 150,000
Retained earnings................................................................ 29,440
Dividends ........................................................................... 11,000
Sales Revenue ..................................................................... 557,460
Gain on sale oI Building................ 15,500
Cost oI Goods Sold................ 227,300
Salaries expense (Selling) .................................................. 62,900
Salaries expense (Selling) ................................................... 87,000
Utilities expense ................................................................. 6,300
Rent Store .....................8,000
Depreciation expense: building ........................................... 3,000
Depreciation expense: Iixtures and equipment (store).......... 1,500
Interest expense .................................................................. 8,500
Advertising expense................ 9,000
907,700 907,700
Required: Use the above inIormation to prepare a multiple-step income statement Ior the year ended December 31,
2011

9

Sales Revenue 557,460
Cost oI Goods Sold 227,300
Gross ProIit 330,160
Operating Expenses
Salaries expense (Selling) 62,900
Salaries expense (Selling) 87,000
Advertising expense 9,000
Utilities expense 6,300
Rent Store 8,000
Depreciation expense: building 3,000
Depreciation expense: Iixtures and equipment (store) 1,500
Total Operating Expenses 177,700
Operating Income 152,460
Non Operating Revenues and Expenses
Interest expense (8,500)
Gain on Sale oI Building 15,500
Total Non Operating Revenues and Expenses 7,000
Net Income 159,460



10
Problem 2 Prepare journal entries to record the Iollowing merchandising transactions oI Garcia
Company, which applies the perpetual inventory system. (int. It will help to identiIy each receivable
and payable; Ior example, record the purchase on August 1 in Accounts PayableWeir Co.)

Aug. 1 Purchased merchandise Irom Weir Company Ior $25,000 under credit terms oI 110,
n45, FOB destination, invoice dated August 1.
2 At Weir`s request, Garcia paid $300 Ior Ireight charges on the August 1 purchase
reducing the amount owed to Weir.
4 Sold merchandise to Cassidy Corp. Ior $3,800 under credit terms oI 210, n60,
FOB destination. The merchandise had cost $1,700.
6 Purchased merchandise Irom Lesh Corporation Ior $6,000 under credit terms oI 2/15, n/30.
FOB shipping point, invoice dated August 6. The invoice showed that at Garcia`s request Lesh
paid the $160 shipping charges and added that amount to the bill.
7 Paid $140 Ior shipping charges relating to the August 4 sale to Cassidy Corp.
8 Cassidy returned merchandise Irom the August 4 sale that had cost Garcia $500 and been sold
Ior $750. The merchandise was restored to inventory.
9 AIter negotiations with Lesh Corporation concerning problems with the merchandise
purchased on August 6, Garcia received a credit memorandum Irom Lesh granting a price
reduction oI $600.
14 Received the balance due Irom Cassidy Co. Ior the August 4 sale less the return on
August 8.
15 Paid the amount due Lesh Corporation Ior the August 6 purchase less the price reduction
granted.
19 Sold merchandise to Terrapin Co. Ior $3,100 under credit terms oI 2/10, n/30,
FOB destination, invoice dated August 19. The merchandise had cost $1,000.
22 Terrapin requested a price reduction on the August 19 sale because the merchandise did
not meet speciIications. Garcia sent Terrapin a $600 credit memorandum to resolve the issue.
29 Received Terrapin Co`s cash payment Ior the amount due Irom the August 19 sale.
30 Paid Weir Company the amount due Irom the August 1 purchase.



Date Debit Credit
8/1

Merchandise Inventory 25,000


Accounts PayableWeir Co. 25,000



8/2

Accounts PayableWeir Co. 300


Cash 300

8/4

Accounts Receivable Cassidy Co. 3,800


Sales Revenue 3,800

11
Date Debit Credit
8/4

Cost oI Goods Sold 1,700


Merchandise Inventory 1,700



8/6

Merchandise Inventory 6,160


Accounts Payable - Lesh Corporation 6,160

8/7

Freight Out selling expense 140


Cash 140



8/8

Sales Returns & Allowances 750


Accounts Receivable Cassidy Co. 750





Merchandise Inventory 500


Cost oI Goods Sold 500



8/9

Accounts Payable - Lesh Corporation 600


Merchandise Inventory 600



8/14

Cash 2,989


Sales Discount 61


Accounts Receivable Cassidy 3,050










12
Date Debit Credit
8/15

Accounts Payable - Lesh Corporation 5,560


Merchandise Inventory 111


Cash 5,449



8/19

Accounts Receivable Terrapin Co. 3,100


Sales Revenue 3,100





Cost oI Goods Sold 1,000


Merchandise Inventory 1,000

8/22 Sales Returns & Allowances 600
Accounts Receivable Terrapin Co. 600

8/29 Cash 2,450
Sales Discounts 50
Accounts Receivable Terrapin Co. 2,500

8/30 Accounts PayableWeir Co. 24,700
Cash 24,700







13
Problem 3 Carey Company sells many products. Whamo is one oI its popular items. Below is an analysis oI the
inventory purchases and sales oI Whamo Ior the month oI March.


Sales
Purchases
Selling
Units Unit Cost Units Price/Unit

3/1 Beginning inventory 15 $60
3/3 Purchase 35 $78
3/4 Sales 18 $120
3/10 Purchase 8 $82
3/25 Purchase 10 $85
3/30 Sales 30 $130
TOTAL 68 units 48 units
INSTRUCTIONS
(a) Compute the Cost oI goods available Ior sale and the number units available Ior sale.

Cost of Good Available for Sale 15`60 + 35`78 + 8`82 + 10`85 5,136
Units Available for Sale 15 + 35 + 8 + 10 68

(b) Compute the cost oI goods sold and the cost assigned to ending inventory using
Cost oI Goods Sold Ending Inventory
(1) FIFO 15*60 3*78 1,134 1,662
30*78 2,340
3,474
(2) LIFO 18*78 1,404 1,290
10*85 850
8*82 656
12*78 936
3,846
(3) Average Cost (15*60 35*78)/50 1,531
72.6*18 1307
2,298
3,605

(c) What is gross proIit under LIFO?

120`18 + 130`30) - 3,846 6,060 - 3,846 2,214

(d) Using the weighted average and LIFO periodic, calculate the amount assigned
to cost oI goods sold and inventory on hand on March 31. (Show computations)

Cost oI Goods Sold Ending Inventory
LIFO 5,136 - 1,290 3,846 15`60 + 5`78 1,290

Average Cost 5,136 / 68 75.53 ` 20 1,511
75.53 ` 48
3,625




14
Problem 4. Nancy and the Pennsters most recently reconciled its bank statement and book balances oI
cash on August 31 and it showed two checks outstanding, No. 6248 Ior $205 and No. 6250 Ior $480.
The Iollowing inIormation is available Ior its September 30, 2005, reconciliation:

From the September 3 Bank Statement
From Aancy's Accounting Records
Cash Receipts Deposited
Cash
Date Debit
a. Sept. 5 300.00
b. 13 450.00
c. 18 7,200.00
d. 19 960.00
e. 30 1,200.00
I.
g. 10,110.00
h.
i.
Cash Disbursements
Check Cash
No. Credit
j. 6252 500.00
k. 6253 220.00
l. 6254 280.00
m. 6255 1,200.00
n. 6256 20.00
o. 6257 970.00
p. 6258 210.00
q. 6259 40.00
r. 6260 150.00
s.
t. 3,590.00
u.
15
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
Aug. 31 Balance 9,490.00
Sept. 30 Total receipts R12 10,110.00 19,600.00
30 Total disbursements D23 3,590.00 16,010.00

Other Information
The bank statement shows an end oI month balance oI $17,750. Check No. 6248 Irom last month did
appear on this month`s bank statement but check No. 6250 along with check No. 6255 and No. 6260 are
still outstanding. The September 30 deposit oI $1,200 does not appear on the bank statement. The bank
statement showed that the band earned $50 oI interest income during the month.
Check No. 6258 is correctly drawn Ior $210 to pay Ior audio equipment; however, the recordkeeper
misread the amount and entered it in the accounting records with a debit to Audio Equipment and a
credit to Cash oI $120. A $420 check shown received Irom a customer, M. Gordon, in payment oI his
account was returned NSF. Its return had not been recorded when the bank Iirst notiIied the company.
The bank statement showed the collection oI a $1,600 note Ior the band by the bank. The bank deducted
a $30 collection Iee. The collection and Iee are not yet recorded.
Required
!reparation Component

Prepare the September 30, 2005, bank reconciliation Ior this company.

Nancy and the Pennsters
Bank Reconciliation
September 30, 2005

Cash balance per bank statement ........................................ $17,750
Add: Deposits in transit ....................................................... 1,200
18,950
Less: Outstanding checks
No. 6250 ........................................................... $ 480
No. 6255 ............................................................ 1,200
No. 6260 ........................................................... 150 1,830
Adjusted cash balance per bank ........................................... $ 17,120

Cash balance per books ....................................................... $ 16,010
Add: nterest on bank account ............................................ $ 50
Note collected by bank ($1,600 principal minus $30 bank fee) 1,570 1,620
17,630
Less: Check # 6258 error ..................................................... 90
NSF check .................................................................. 420 510
Adjusted cash balance per books ......................................... $ 17,120



16
Prepare the journal entries to adjust the book balance oI cash to the reconciled balance.

Sep 30 Cash ......................................................................... 50
nterest Revenue .................................................. 50
(To record September 2005 interest earned)

30 Cash ......................................................................... 1,570
Miscellaneous Expense ........................................ 30
Notes Receivable ................................................. 1,600
(To record collection of 1,600 note)

30 Equipment .................................................................... 90
Cash .................................................................... 90
(To correct recording error on check No. 6258)

30 Accounts Receivable M. Gordon .............................. 240
Cash .................................................................... 240
(To record NSF check)








17
Problem 5
P5-A Andre 3000 Company has credit sales oI $3,000,0000 Ior the year 2011. on December 31, 2011, the
company`s Allowance Ior DoubtIul Accounts has and adjusted balance oI $20,000. On the basis oI pass
experience the company estimated that 4 oI credit sales is uncollectible.

Required:

1. Prepare the adjusting entry to record bad debts expense.

Date
12/31 Bad Debt Expense 120,000
2011 Allowance Ior DoubtIul Accounts 120,000


2. What is the balance oI the Allowance Ior DoubtIul Accounts aIter the adjusting entry?

20,000 + 120,000 140,000

B. Andre 3000 Company has credit sales oI $3,000,0000 Ior the year 2011. on December 31, 2011, the
company`s Allowance Ior DoubtIul Accounts has and adjusted balance oI $20,000. The Company prepares a
schedule oI its December 31, 2011, accounts receivable by age. On the basis oI past experience, it estimates the
percent oI receivables in each age category that will become uncollectible. This inIormation is summarized
here.

December 31, 2011
Accounts
Receivable
Age of
Accounts Receivable
Expected Percent
Uncollectible
Expected
Uncollectible
Accounts
$500,000 Not yet due 1.20 6,000
200,000 1 to 30 days past due 1.75 3,500
150,000 30 to 70 days past due 5 30,000
20,000 70 to 110 days past due 20 4,000
5,000 Over 110 days past due 30 1,500
45,000


Required:
1. Prepare the adjusting entry to record bad debts expense.

Date
12/31 Bad Debt Expense 25,000
2011 Allowance Ior DoubtIul Accounts 25,000


2. What is the balance oI the Allowance Ior DoubtIul Accounts aIter the adjusting entry?

45,000






18
P5-B Katrina Company accepts cash and two major credit cards, Collegeville Bankand and Plastic
Fantastic. Collegeville Bank deducts a 5 service charge on all sales and deposits the money in the
checking accounts oI its commercial customers as soon as the credit card receipts are received. Katrina
Company deposits Collegeville Bank receipts daily. Plastic Fantastic deducts a 3 service charge on all
sales. They usually take about 10 days to pay once the credit card receipts are received Katrina
Company deposits Plastic Fantastic receipts weekly. The Iollowing transactions were completed during
September:

The Iollowing selected transactions are Irom Katarina Company:

Required

Prepare journal entries to record these transactions and events.

24
Dec. 16 Accepted a $40,000, 60-day, 9 note dated this day granting Ginny Giles a time
extension on her account receivable.

Notes Receivable - Giles 40,000
Accounts Receivable - Giles 40,000

31 Made an adjusting entry to record the accrued interest on the Giles note.

Interest Receivable 150 40,000`0.09`15/360)
Interest Revenue 150

25
Jan 1. Prepared a company check Ior $500 to establish the petty cash Iund.

Petty Cash 500
Cash 500

Jan. 31 Accepted a $25,000, 60-day, 12 note dated this day granting Brent Bundy a time
extension on his past-due account receivable.

Notes Receivable - Bundy 25,000
Accounts Receivable - Bundy 25,000

Feb. 14 Received payment oI principal plus interest Irom Giles Ior the note oI December 15.

Cash 40,600
Interest Receivable 150
Interest Revenue 450 40,000`0.09`45/360)
Notes Receivable - Giles 40,000

April 1 Bundy dishonored his note when presented Ior payment.

Accounts Receivable - Bundy 25,500
19
Interest Revenue 500 25,000`0.12`60/360)
Notes Receivable - Bundy 25,000

June 10 Made $670 ( that had cost $450) oI sales to parents who used the Collegeville Bankcard.

Cash 636
Bank Service Fee 34 0.05`670)
Sales 670

Cost of Goods Sold 450
Merchandise Inventory 450

June 11. Made $1,290 (that had cost $850) oI sales to parents who used the Plastic Fantastic card.

Accounts Receivable - Plastic Fantastic 1,251
Bank Service Fee 39 0.03`1,290)
Sales 1,290

Cost of Goods Sold 850
Merchandise Inventory 850

June 12 Submitted Plastic Fantastic card receipts to the credit card company Ior payment.

June 17 Received the amount due Irom Plastic Fantastic.

Cash 1,251
Accounts Receivable - Plastic Fantastic 1,251

Aug 12 The company wrote oII $15,000 oI uncollectible accounts receivable (one oI the accounts
written oII belonged to Ebony James).

Allowancce for Doubtful Accounts 15,000
Accounts Receivables 15,000

20
Sept. Prepared a company check both to replenish the Iund Ior the Iollowing expenditures made
since Jan 1
a. Paid $156 Ior janitorial services
b. Paid $127.36 Ior miscellaneous expenses
c. Paid postage expenses oI $87.00
d. Paid $114.30 Ior newspaper advertisements.
The petty cashier reports that $22.30 remains in the petty cash box

anitorial Services Expense $156.00
Miscellaneous Expense 127.36
Postage Expense 87.00
Advertising Expense 114.30
Cash Over and Short 6.96
Cash 477.70

Oct. 1. The company received a check Irom Ebony James Ior $1,500 in payment oI her accout. This
account was written oII on Aug, 12.

Accounts Receivables - Ebony ames 1,500
Allowancce for Doubtful Accounts 1,500

Cash 1,500
Accounts Receivable - Ebony ames 1,500