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"=E27" or more complex as "=E27*5," or something similar to the time-value-of-money formula. These are addressed in the tutorial
text provided for Microsoft Excel.

Where a highlighted cell shows titles such as "Formula" you may enter the appropriate formula or enter a numerical value appropriate
for that step of the challenge. Most of the values necessary for the appropriate formula are located on the template in cells with
borders or in other yellow highlighted cells. The formula may be a simple "Look to" formula, an equal sign and a cell reference,
"=E27" or more complex as "=E27*5," or something similar to the time-value-of-money formula. These are addressed in the tutorial
text provided for Microsoft Excel.
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Name:
Solution
Date:
Instructor:
Course:
th
Intermediate Accounting, 15 Edition by Kieso, Weygandt, and Warfield

E7-1 (Determining Cash Balance) The controller for Clint Eastwood Co. is attempting to determine the
amount of cash and cash equivalents to be reported on its December 31, 2014, balance sheet. The
following information is provided.
1. Commercial savings account has a balance of:
$600,000 and a commercial checking
account has a balance of
$900,000 Both are held at First National Bank of Olathe.
2. Money market fund account held at Volonte Co. (a mutual fund organization) permits Weinstein to
write checks on this balance,
$5,000,000
3. Travel advances for executive travel for the first quarter of the next year (employee to reimburse
through salary reduction) are:
$180,000
$1,500,000
4. A separate cash fund is restricted for the retirement of long-term debt. Its balance is
5. Petty cash fund of:
$1,000
$150,000
6. An I.O.U. from Marianne Koch, a company customer, in the amount of
7. A bank overdraft of
$110,000 has occurred at one of the banks the company uses to
deposit its cash receipts. At the present time, the company has no deposits at this bank.
8. The company has two certificates of deposit, each totaling
$500,000 These CDs have
a maturity of 120 days.
9. Eastwood has received a check that is dated January 12, 2015, in the amount of
$125,000
10. Eastwood has agreed to maintain a cash balance of
$500,000 at all times at First National
Bank of Yojimbo to ensure future credit availability.
11. Eastwood has purchased
$2,100,000 of commercial paper of Sergio Leone Co. which is due in
60 days.
12. Currency and coin on hand amounted to
$7,700
Instructions:
(a) Compute the amount of cash to be reported on Weinstein Co.s balance sheet at
December 31, 2014.
Cash for Eastwood includes the following:
1. Commercial savings account at First National Bank of Yojimbo with a balance of:
1. Commercial checking account at First National Bank of Yojimbo with a balance of:
2. Money market fund account held at Volonte Co.:
5. Petty cash fund of:
11. Commercial paper (cash equivalnet) of Sergio Leone Co. due in 60 days:
12. Currency and coin on hand:

Cash reported on December 31, 2014, balance sheet:

$600,000
900,000
5,000,000
1,000
2,100,000
7,700

$8,608,700

(b) Indicate the proper reporting for items that are not reported as cash on the December 31, 2014,
balance sheet.
3. Travel advances (reimbursed by employee)* should be reported as receivable
employee in the amount of $180,000.
$180,000
4. Cash restricted in the amount of $1,500,000 for the retirement of long-term debt
should be reported as a noncurrent asset identified as Cash restricted for retirement of
long-term debt.

$1,500,000

6. An IOU from Marianne Koch should be reported as a receivable in the amount of


$190,000.
$150,000
267026170.xlsx, Exercise 7-1 Solution, Page 3 of 13, 04/18/2015, 02:50:50

Name:
Solution
Date:
Instructor:
Course:
6. An IOU from Marianne Koch should be reported as a receivable
in the amount of
$190,000.
$150,000

267026170.xlsx, Exercise 7-1 Solution, Page 4 of 13, 04/18/2015, 02:50:50

Name:
Instructor:

Solution

Date:
Course:

7. The bank overdraft of $110,000 should be reported as a current liability.


$110,000
8. Certificates of deposits of $500,000 each should be classified as temporary
investments.
$1,000,000
9. Postdated check of $125,000 should be reported as an accounts receivable.
$125,000
10. The compensating balance requirement does not affect the balance in cash. A note
disclosure indicating the arrangement and the amounts involved should be described in
the notes.

267026170.xlsx, Exercise 7-1 Solution, Page 5 of 13, 04/18/2015, 02:50:50

$0

Name:
Date:
Instructor:
Course:
th
Intermediate Accounting, 15 Edition by Kieso, Weygandt, and Warfield

E7-1 (Determining Cash Balance) The controller for Clint Eastwood Co. is attempting to determine the
amount of cash to be reported on its December 31, 2014, balance sheet. The following information is
provided.
1. Commercial savings account has a balance of:
$600,000 and a commercial checking
account has a balance of
$900,000 Both are held at First National Bank of Yojimbo.
2. Money market fund account held at Volonte Co. (a mutual fund organization) permits Eastwood to
write checks on this balance,
$5,000,000
3. Travel advances for executive travel for the first quarter of the next year (employee to reimburse
through salary reduction) are:
$180,000
$1,500,000
4. A separate cash fund is restricted for the retirement of long-term debt. Its balance is
5. Petty cash fund of:
$1,000
6. An I.O.U. from Marianne Koch, a company customer, in the amount of
$190,000
7. A bank overdraft of
$110,000 has occurred at one of the banks the company uses to
deposit its cash receipts. At the present time, the company has no deposits at this bank.
8. The company has two certificates of deposit, each totaling
$500,000 These CDs have
a maturity of 120 days.
9. Eastwood has received a check that is dated January 12, 2015, in the amount of
$125,000
10. Eastwood has agreed to maintain a cash balance of
$500,000 at all times at First National
Bank of Yojimbo to ensure future credit availability.
11. Eastwood has purchased
$2,100,000 of commercial paper of Sergio Leone Co. which is due in
60 days.
12. Currency and coin on hand amounted to
$7,700
Instructions:
(a) Compute the amount of cash to be reported on Eastwood Co.s balance sheet at
December 31, 2014.
Cash for Eastwood includes the following:
1. Commercial savings account at First National Bank of Yojimbo with a balance of:
Text line, as required
Text line, as required
Text line, as required
Text line, as required
Text line, as required
Text line, as required
Text line, as required
Cash reported on December 31, 2014, balance sheet:

Amount
Amount
Amount
Amount
Amount
Amount
Amount
Amount
Amount

(b) Indicate the proper reporting for items that are not reported as cash on the December 31, 2014,
balance sheet.
Text line, as required
Amount
Text line, as required
Amount
Text line, as required
Amount
267026170.xlsx, Exercise 7-1, Page 6 of 13, 04/18/2015, 02:50:50

Name:
Text line, as required
Instructor:

Date:
Course:
Amount

Text line, as required


Amount
Text line, as required
Amount
Text line, as required
Amount
Text line, as required
Amount
Text line, as required
Amount
Text line, as required
Amount
Text line, as required
Amount
Text line, as required
Amount

267026170.xlsx, Exercise 7-1, Page 7 of 13, 04/18/2015, 02:50:50

Name:
Solution
Date:
Instructor:
Course:
th
Intermediate Accounting, 15 Edition by Kieso, Weygandt, and Warfield

E7-5 (Record Sales Gross and Net) On June 3, Arnold Company sold to Chester Company
merchandise having a sale price of
$3,000
with terms of 2/10, n/60, f.o.b.
, terms n/30, was received by Arquette on
shipping point. An invoice totaling
$90
June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check
for the balance due from Chester Company.
Instructions:
(a) Prepare journal entries on the Arnold Company books to record all the events noted above under
each of the following bases:
(1) Sales and receivables are entered at gross selling price.
Jun 3

Jun 12

Accounts Receivable - Arnold Company


Sales

3,000

Cash
Sales Discounts ($3,000 2%)
Accounts Receivable - Arnold Company

2,940
60

3,000

3,000

(2) Sales and receivables are entered at net cash discounts.


Jun 3

Jun 12

Accounts Receivable - Arnold Company


Sales ($3,000 98%)

2,940

Cash
Accounts Receivable - Arnold Company

2,940

2,940

2,940

(b) Prepare the journal entry under basis 2, assuming that Chester Company did not remit payment
until July 29.
Jul 29

Cash
Accounts Receivable - Arnold Company
Sales Discounts Forfeited ($3,000 2%)

3,000
2,940
60

(Note to instructor: Sales discounts forfeited could have been recognized at the time the discount period
lapsed. The company, however, would probably not record this forfeiture until final cash settlement.)

267026170.xlsx, Exercise 7-5 Solution, Page 8 of 13, 04/18/2015, 02:50:50

Instructor:
Course:
Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield

E7-5 (Record Sales Gross and Net) On June 3, Arnold Company sold to Chester Company
merchandise having a sale price of
$3,000
with terms of 2/10, n/60, f.o.b.
, terms n/30, was received by Chester on
shipping point. An invoice totaling
$90
June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check
for the balance due from Chester Company.
Instructions:
(a) Prepare journal entries on the Arnold Company books to record all the events noted above under
each of the following bases:
(1) Sales and receivables are entered at gross selling price.
Jun 3

Account Title
Account Title
Account Title

Jun 12

Account Title
Account Title
Account Title

(2) Sales and receivables are entered at net cash discounts.


Jun 3

Account Title
Account Title
Account Title

Account Title
Account Title
Account Title
(b) Prepare the journal entry under basis 2, assuming that Chester Company did not remit payment until
July 29.
Jun 12

Jul 29

Account Title
Account Title
Account Title

267026170.xlsx, Exercise 7-5, Page 9 of 13, 04/18/2015, 02:50:50

Name:
Solution
Date:
Instructor:
Course:
th
Intermediate Accounting, 15 Edition by Kieso, Weygandt, and Warfield

P7-1 (Determine Proper Cash Balance) Francis Equipment Co. closes its books regularly on December
31, but at the end of 2014 it held its cash book open so that a more favorable balance sheet could be
prepared for credit purposes. Cash receipts and disbursements for the first 10 days of January were
recorded as December transactions. The information is given below.
1. January cash receipts recorded in the December cash book totaled
$45,640
, of which
$28,000
represents cash sales, and
$17,640
represents collections on account for
which cash discounts of
$360
were given.
2. January cash disbursements recorded in the December check register liquidated accounts payable
of
$22,450
on which discounts of
$250
were taken.
3. The ledger has not been closed for 2014.
4. The amount shown as inventory was determined by physical count on December 31, 2014.
The company uses the periodic method of inventory.
Instructions:
(a) Prepare any entries you consider necessary to correct Franciss accounts at December 31.
12/31/2014

12/31/2014

Accounts Receivable ($17,640 + $360)


Sales
Cash
Sales Discounts

18,000
28,000

Cash
Purchases Discounts
Accounts Payable

22,200
250

45,640
360

22,450

(b) To what extent was Francis Equipment Co. able to show a more favorable balance sheet at
December 31 by holding its cash book open? (Compute working capital and the current ratio.)
Assume that the balance sheet that was prepared by the company showed the following amounts:
Per Balance Sheet
After Adjustment
Current assets
Debit
Credit
Debit
Credit
Cash
$39,000
$15,560
Receivables
42,000
60,000
Inventories
67,000
67,000
Totals:
$148,000
$142,560
Current Liabilities
Accounts Payable
Other Current Liabilities
Totals:
Working capital

$45,000
14,200
$59,200
$88,800

$67,450
14,200
$81,650
$60,910

Current ratio:
2.50 to 1
1.75 to 1
Current Ratios: $148,000 $59,200 = 2.50 to 1, and $142,560 $81,650 = 1.75 to 1

267026170.xlsx, Problem 7-1 Solution, Page 10 of 13, 04/18/2015, 02:50:50

Name:
Date:
Instructor:
Course:
th
Intermediate Accounting, 15 Edition by Kieso, Weygandt, and Warfield
Primer on Using Excel in Accounting by Rex A Schildhouse
P7-1 (Determine Proper Cash Balance) Francis Equipment Co. closes its books regularly on December
31, but at the end of 2014 it held its cash book open so that a more favorable balance sheet could be
prepared for credit purposes. Cash receipts and disbursements for the first 10 days of January were
recorded as December transactions. The information is given below.
1. January cash receipts recorded in the December cash book totaled
$45,640
, of which
$28,000
represents cash sales, and
$17,640
represents collections on account for
which cash discounts of
$360
were given.
2. January cash disbursements recorded in the December check register liquidated accounts payable
of
$22,450
on which discounts of
$250
were taken.
3. The ledger has not been closed for 2014.
4. The amount shown as inventory was determined by physical count on December 31, 2014.
The company uses the periodic method of inventory.
Instructions:
(a) Prepare any entries you consider necessary to correct Franciss accounts at December 31.
Dec 31, 14

Dec 31, 14

Account Title
Account Title
Account Title
Account Title

Amount
Amount

Account Title
Account Title
Account Title

Amount
Amount

Amount
Amount

Amount

(b) To what extent was Francis Equipment Co. able to show a more favorable balance sheet at
December 31 by holding its cash book open? (Compute working capital and the current ratio.)
Assume that the balance sheet that was prepared by the company showed the following amounts:
Per Balance Sheet
After Adjustment
Current assets
Debit
Credit
Debit
Credit
Cash
$39,000
Amount
Receivables
42,000
Amount
Inventories
67,000
Amount
Totals:
$148,000
Formula
Current Liabilities
Accounts Payable
Other Current Liabilities
Totals:
Working capital
Current ratio:

$45,000
14,200
$59,200
Formula
Formula to 1

Amount
Amount
Formula
Formula
Formula to 1

267026170.xlsx, Problem 7-1, Page 11 of 13, 04/18/2015, 02:50:50

Name:
Solution
Date:
Instructor:
Course:
th
Intermediate Accounting, 15 Edition by Kieso, Weygandt, and Warfield

P7-3 (Bad-Debt ReportingAging) Manilow Corporation operates in an industry that has a high rate of
bad debts. Before any year-end adjustments, the balance in Manilows Accounts Receivable account
was
$555,000 and the Allowance for Doubtful Accounts had a credit balance of
$40,000
The year-end balance reported in the balance sheet for the Allowance for Doubtful
Accounts will be based on the aging schedule shown below.
Days Account Outstanding
Less than 16 days
Between 16 and 30 days
Between 31 and 45 days
Between 46 and 60 days
Between 61 and 75 days
Over 75 days

Amount
$300,000
100,000
80,000
40,000
20,000
15,000

Probability of Collection
0.98
0.90
0.85
0.80
0.55
0.00

Instructions:
(a) What is the appropriate balance for the Allowance for Doubtful Accounts at the year-end?
Days Account Outstanding
0-15 days
16 - 30 days
31 - 45 days
46 - 60 days
61 - 75 days
Over 75 days
Balance for Allowance for Doubtful Accounts

Amount
$300,000
100,000
80,000
40,000
20,000
15,000

Probability of Collection
0.98
0.90
0.85
0.80
0.55
0.00

Doubtful Accts:
$6,000
10,000
12,000
8,000
9,000
$45,000

The accounts which have been outstanding over 75 days ($15,000) and have zero probability of collection
would be written off immediately by a debit to Allowance for Doubtful Accounts for $15,000 and a credit to
Amounts Receivable for $15,000 . It is not considered when determining the proper amount for the
Allowance for Doubtful Accounts.
(b) Show how Accounts Receivable would be presented on the balance sheet.
Accounts Receivable ($555,000 - $15,000)
$540,000
Less: Allowance for Doubtful Accounts
45,000
Accounts Receivable - Net

$495,000

(c) What is the dollar effect of the year-end bad debt adjustment on the before-tax income?
The year-end bad debt adjustment would decrease before-tax income $20,000 as computed below:
Estimated amount required in the Allowance for Doubtful Accounts
Balance in the account after write-off of uncollectible accounts but
before adjustment ($40,000 - $15,000)
Required charge to expense

267026170.xlsx, Problem 7-3 Solution, Page 12 of 13, 04/18/2015, 02:50:50

$45,000
25,000
$20,000

Name:
Date:
Instructor:
Course:
th
Intermediate Accounting, 15 Edition by Kieso, Weygandt, and Warfield

P7-3 (Bad-Debt ReportingAging) Manilow Corporation operates in an industry that has a high rate of
bad debts. Before any year-end adjustments, the balance in Manilows Accounts Receivable account
was
$555,000 and the Allowance for Doubtful Accounts had a credit balance of
$40,000
The year-end balance reported in the balance sheet for the Allowance for Doubtful
Accounts will be based on the aging schedule shown below.
Days Account Outstanding
Less than 16 days
Between 16 and 30 days
Between 31 and 45 days
Between 46 and 60 days
Between 61 and 75 days
Over 75 days

Amount
$300,000
100,000
80,000
40,000
20,000
15,000

Probability of Collection
0.98
0.90
0.85
0.80
0.55
0.00

Instructions:
(a) What is the appropriate balance for the Allowance for Doubtful Accounts at the year-end?
Days Account Outstanding
0-15 days
16 - 30 days
31 - 45 days
46 - 60 days
61 - 75 days
Over 75 days

Amount
$300,000
100,000
80,000
40,000
20,000
15,000

Probability of Collection
0.98
0.90
0.85
0.80
0.55
0.00

Doubtful Accts:
Formula
Formula
Formula
Formula
Formula
Formula
Formula

Enter text answer here.

(b) Show how Accounts Receivable would be presented on the balance sheet.
Account Title
Less: Account Title
Text Title

Amount
Amount
Formula

(c) What is the dollar effect of the year-end bad debt adjustment on the before-tax income?
Enter text answer as desired here.
Text Title
Text explanation as required.
Text Title

267026170.xlsx, Problem 7-3, Page 13 of 13, 04/18/2015, 02:50:50

Amount
Amount
Formula