ACC 151- Okyere Practice Problems Notes PDF

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ACC 151 OKYERE PRACTICAL PROBLEMS
QUESTIONS WITH ANSWERS...

Description

Bank Reconciliation Problem Wright company deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on May 31, 20918, its Cash account shows a $27,500 debit balance. The company's May 31 bank statement shows $25,800 on deposit in the bank. a. The May 31 bank statement included a $100 debit memorandum for bank services; the company has not yet recorded the cost of these services. b. Outstanding checks as of May 31 total $5,600 c. May 31 cash receipts of $6,200 were placed in the bank’s night depository after banking hours and were recorded on the May 31 bank statement d. In reviewing the bank statement, a $400 check written by Smith Company was mistakenly drawn against Wright’s account. e. A debit memorandum for $600 refers to a $600 NSF check from a customer; the company has not yet recorded this NSF check. Prepare a bank reconciliation for the company using the above information. Wright Company Bank Reconciliation May 31, 2018 Bank Statement Balance $25,800 Add: Deposit of May 31 6,200 Bank Error 400

Book Balance $27,500 Add:

Deduct: Outstanding Checks

5,600

Deduct: Bank service charge 100 NSF Check 600

Adjusted book balance

26,800

Adjusted book Balance 26,800

Nichols Co. has the following information for the second quarter of 2012 Cash balance, March 31 Sales for April; all cash Sales for May; all cash Sales for June; all cash Cost of Goods Sold as % of Sales (all cash) Operating Expenses as % of Sales (all cash) Purchase a new computer in June with cash Interest expense is paid in May Income taxes paid: April May June

$15,000 200,000 300,000 400,000 75% 10% 65,000 40,000

The minimum cash balance for any month is:

$10,000

9,000 1,500 18,000

Nichols Company Cash Budget For the Months Ended April 40, May 31, and June 30 April

May

June

Beginning Cash Balance

$15,000

$36,000

39,500

Cash Collections (Cash Sales)

$200,000

$300,000

400,000

Total Cash Available

215,000

336,000

400,000

Purchase of Inventory

75% x 200,000 = 150,000

75% x 300,000 225,000

75% x 400,000 300,000

Operating Expenses

10% x 200,000 = 20,000

10% x 300,000 30,000

10% x 400,000 40,000

Disbursements:

Interest Expense Income taxes

40,000 9,000

1,500

Purchase of new computer

18,000 65,000

Total Disbursements

179,000

Net Cash available

215,00-179,000 36,000

296,500 39,500

423,000 16,500

Minimum Cash Balance

10,000

10,000

10,000

Cash available for additional investments

26,000

29,500

6,500

Short-Term Investments & Receivables Allowance Method During its first year of operations, Ness Company had the following transactions. The company uses the percent-of-sales method to estimate uncollectible accounts. Required: Prepare all journal entries for the transactions below. Explanations are not required. Ignore Cost of Goods Sold. Cash Sales Credit Sales Collections on Account Write-offs of uncollectible accounts Uncollectible ACcount Expense

Date

$1,000,000 $ 2,000,000 $ 500,000 $75,000 $2.5%

Account Titles and Explanation Cash

Debit 1,000,000

Sales Revenue Accounts Receivable

1,000,000 2,000,000

Sales Revenue Cash

2,000,000 500,000

Accounts Receivable Allowance for Doubtful Accounts

500,000 75,000

Accounts Receivable Bad Debt Expense Allowance for Uncollectible Accounts

Credit

75,000 2,000,000 x 2.5% 50,000 50,000

On December 1, the Youngstown Company accepted a $8,000 note in settlement of an overdue Accounts Receivable. The note bears 8% interest for 3 months. The Youngstown Company has a year end of December 31. Required: Prepare the journal entries to record the following 1. The transaction on December 1, 2. The accrued interest at December 31, and 3. The collection of the note on March 1 Round any amounts to the nearest dollar. Omit Explanations Principle (Notes Receivable) $8,000 Rate 8% Term 3 months Months until FYE 1 month Months from BOY till due date 2

Date Dec 1

Account Note Receivable

Debit 8,000

Accounts Receivable Dec 31

Interest Receivable

Interest Revenue

Credit

8,000 8,000 x 8% x 1/12 53 53

(Interest = P x R x T) Mar 1

Cash Note Receivable

8,000

Interest Receivable

53

Interest Revenue (Interest = P x R x T)

Pierre Imports uses the perpetual system in accounting for merchandise inventory and had the following transactions during the month of October. Oct 2. Purchased merchandise at a $3,000 price, invoice dated October 2, terms 2/10, n/30. Oct 10. Received a $500 credit memorandum (at full invoice price) for the return of merchandise that it purchases on October 2. Oct. 16 Purchased merchandise at a $5,400 price, invoice dated October 16, terms 2/10, n/30 Oct. 25 Paid for the merchandise purchased on October 16, less the discount. Oct. 30 Paid for the merchandise purchased on October 2. Payment was delayed because the invoice was mistakenly filed for payment today. This error caused the discount to be lost. Prepare the entries to record the above transactions assuming that Pierre Imports records at gross amounts. This is gross account. To do net amount, you use 98% instead of 100 because of the 2/10 n/30 Date

General Journal

Debit

Oct 2

Merchandise Inventory

3,000

Accounts Payable (3,000 x 100%) Oct 10

Accounts Payable (500 x 100%)

3,000 500

Merchandise Inventory Oct 16

Merchandise Inventory

500 5,400

Accounts Payable (5,400 x 100%) Oct 25

Oct 30

Accounts Payable (5,400 x 100%)

Credit

5,400 5,400

Merchandise Inventory (5,400 x 2%)

108

Cash (5,400 - 108)

5,292

Accounts Payable ((3,000 - 500) x 100%) Cash

2,500 2,500...