Name:

Exercise: E7-2, Determining Cash Balance

Course: Acc 422
Date:

Instructions
For each individual situation, determine the amount that should be reported as cash. I
rationale.
0
Checking account balance $925,000
Certificate of Deposit $1,400,000
Cash advance to substidairy $980,000
Utility deposit paid $180
Cash Balance $925,000

1
Checking account balance $600,000
Overdraft in special checking account at same bank $17,000
cash held in a bond sinking fund $200,000
Petty cash $300
coins and currency on hand $1,350
Cash Balance $584,650

2
Checking account balance $590,000
postdated check from customer $11,000
Cash restricted compisation balance requriement $100,000
certified check from customer $9,800
postage stamps on hand $620
Cash Balance $599,800

3
Checking account balance $37,000
Money morket balance with checking privlage $48,000
NSF check from customer $800
Cash Balance $85,000
4
Checking account balance $700,000
Cash restricted for future plant expansion $500,000
short term treasury bills $180,000
cash advance from customer $900
cash advance to comp exc, payable on demand $7,000
refundable deposit of paid to fed gov for preformance on
$26,000
construction
Cash Balance $700,900
at should be reported as cash. If the item(s) is not reported as cash, explain the

Notes
This is cash
This is an investment
This can be both depending on the time periods
Payment, there for not cash
This is the figure without additional information on cash advance

Notes
This is cash
This is a liablility
this is an investment
This is cash
This is cash

Notes
This is cash
Recievable
this is a noncurrent/current asset
This is cash
office expense

Notes
This is cash
cash as there is acess
NSF is reported as collectible / recievable
 Notes
This is cash
this is a noncurrent/current asset
this is a temp investment
This is cash
this is a recievable
This is not cash.
Name:
Exercise: Exercise E7-8, Recording Bad Debts
Course: Acc 422
Date:

At the end of 2007 Aramis Company has accounts receivable of $800,000 and an allowa
accounts of $40,000. On January 16, 2008, Aramis Company determined that its receiva
Company of $6,000 will not be collected, and management authorized its write-off.

Instructions:

Prepare the journal entry for Aramis Company to write off the Ramirez receivable.
What is the net realizable value of Aramis Company's accounts receivable before t
Ramirez receivable?
What is the net realizable value of Aramis Company's accounts receivable after the
Dec 31 Allowence for doubtful accounts
Accounts recievable

What is the net realizable value of Aramis Company's accounts receivable before t
Ramirez receivable?

Accounts recievable
Less: Allowance for doubtfull accounts
What is the netNet realizable
realizable value
value of of A/R before
Aramis write offaccounts receivable after the
Company's
Ramirez receivable?

Accounts recievable
Less: Allowance for doubtfull accounts
Net realizable value of A/R after write off
 eivable of $800,000 and an allowance for doubtful
mpany determined that its receivable from Ramirez
ment authorized its write-off.

rite off the Ramirez receivable.

y's accounts receivable before the write-off of the

y's accounts receivable after the write-off of the

6,000
6,000

y's accounts receivable before the write-off of the

800,000
40,000
offaccounts receivable after the
y's 760,000
write-off of the

794,000
34,000
ff 760,000
Name:
Exercise: Exercise 8-5, Recording Bad Debts
Course: Acc 422
Date:

(Inventoriable Costs—Error Adjustments) Craig Company asks you to review its December 31, 2007
adjustments to the books. The following information is given to you.

1. Craig uses the periodic method of recording inventory. A physical count reveals $234,890 of inventory on hand at Decem
No entry requried..Beginning balance 234,890

Not included in the physical count of inventory is $13,420 of merchandise purchased on December 15 from Browser. This m
December 29 and arrived in January. The invoice arrived and was recorded on December 31.
No entry needed But an adjustment + to invontory
13,420
needed

Included in inventory is merchandise sold to Champy on December 30, f.o.b. destination. This merchandise was shipped aft
recorded as a sale on account for $12,800 on December 31. The merchandise cost $7,350, and Champy received it on Janu
Adj entry need to match period. Title transfer took place in 2008. No change in Invontory
Dec 31 Sales
Accounts recievable

Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $15,630. The mercha
which has not yet arrived, has not been recorded.
Adj entry need to match period. Title transfer took place in 2007. No change in Invontory
Dec 31 Inventory
Accounts payable

Not included in inventory is $8,540 of merchandise purchased from Glowser Industries. This merchandise was received on D
The invoice was received and recorded on December 30.
No entry needed. Adjustment of Inventory + 8,540

Included in inventory was $10,438 of inventory held by Craig on consignment from Jackel Industries.

No entry needed. Consignment is not held on inventory. Adjustment of Inventory - (10,438)

Included in inventory is merchandise sold to Kemp f.o.b. shipping point. This merchandise was shipped after it was counted.
$18,900 on December 31. The cost of this merchandise was $10,520, and Kemp received the merchandise on January 5.
No entry needed. Title transefered at common carrier . Adjustment of Inventory - (10,520)

Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $1,500 w
had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.
Adj entry need account for credit. Invontory needs to be adjusted + 1,500
 Dec 31 Return and Allowance
A/R

Determine the proper inventory balance for Craig Company at December 31, 2007.
237,392
w its December 31, 2007, inventory values and prepare the necessary

inventory on hand at December 31, 2007.

mber 15 from Browser. This merchandise was shipped f.o.b. shipping point on

merchandise was shipped after it was counted. The invoice was prepared and
d Champy received it on January 3.

12,800
12,800

price of $15,630. The merchandise was shipped f.o.b. destination. The invoice,

15,630
15,630

erchandise was received on December 31 after the inventory had been counted.

stries.

shipped after it was counted. The invoice was prepared and recorded as a sale for
merchandise on January 5.

merchandise costing $1,500 which had been sold to a customer for $2,600. No entry
d damaged.
2,600
2,600
Name:
Exercise: Exercise 8-5, Recording Bad Debts
Course: Acc 422
Date:

(FIFO, LIFO and Average Cost Determination) John Adams Company’s record of transactionsfor the mo

Purchases
Quantity: Unit Cost: Total Cost
Apr 1 (Balance on hand) 600 $6.00 $3,600.00
Apr 4 1,500 6.08 $9,120.00
Apr 8 800 6.40 $5,120.00
Apr 13 1,200 6.50 $7,800.00
Apr 21 700 6.60 $4,620.00
Apr 29 500 6.79 $3,395.00
5,300

(a) Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using (1) LIFO and (2)

LIFO
Beginning 600 4,208.00
Ending 5,300
Sold 4,600
Inventory 700

(b) Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO.

FIFO
Beginning 600 4,715.00
Ending 5,300
Sold 4,600
Inventory 700

(c) Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.

FIFO Cost of goods sold

21-Apr 200 6.60 1320
29-Apr 500 6.79 3395
Ending inventory 700 4715
Cost of good Available $33,655.00
 Deduct: Ending Inventory 4,715
Cost of Goods sold $28,940.00

(d) In an inflationary period, which inventory method—FIFO, LIFO, average cost—will show the highest net income?
FIFO will show the highest net income and the largest income tax hence the use of LIFO for tax purposes in industries in ex
ord of transactionsfor the month of April was as follows.

Sales
Quantity: @ Total cost
Apr 3 500 10.00 $5,000.00
Apr 9 1,400 10.00 $14,000.00
Apr 11 600 11.00 $6,600.00
Apr 23 1,200 11.00 $13,200.00
Apr 27 900 12.00 $10,800.00

4,600

t April 30 using (1) LIFO and (2) average cost.

Average Cost
4,445.00

sing (1) FIFO and (2) LIFO.

buy sell Calc
LIFO Apr 1 600
4,603.00 Apr 3 -500
Apr 4 1,500
Apr 8 800
Apr 9 -1,400
Apr 11 -600 300
Apr 13 1,200
Apr 21 700
Apr 23 -1,200
Apr 27 -900 -200
29-Apr 500
total

ed at FIFO.
 the highest net income?
r tax purposes in industries in external use.
bal buy sell Calc bal
Apr 29 500 500
100 $600.00 Apr 27 -900
Apr 23 -1,200 -2,100
Apr 21 700 200
Apr 13 1,200 1,900
100 608 Apr 11 -600
Apr 9 -1,400 -2,000
Apr 8 800
Apr 4 1,500 2,300
Apr 3 -500 -500
500 3395 1-Apr 600 600
4,603 total
3,395

1,320.0

4,715
Name:
Exercise: Exercise 8-5, Recording Bad Debts
Course: Acc 422
Date:

(Determining Merchandise Amounts—Periodic) Two or more items are omitted in each of the followi
in the amounts that are missing.

 2005 2006
Sales 290,000 360,000
Sales returns 11,000 13,000
Net sales 279,000 347,000
Beginning inventory 20,000 32,000
Ending inventory 32,000
Purchases 260,000
Purchase returns and 5,000 8,000
allowances
Transportation-in 8,000 9,000
Cost of goods sold 233,000 256,000
Gross profit on sales 46,000 91,000
ed in each of the following tabulations of income statement data. Fill

2007
410,000
20,000
390,000
?
?
298,000
10,000
12,000
293,000
97,000