B
11 1A
2D
3D
4C
5A
6B
7D
8A
9A
10 D
12 D
13 B
14 A
15 C
16 A
17 B
18 D
19 A
20 B
21
a.
Dec. 31
Uncollectible-Account Expense
Allowance for Uncollectible Accounts
($1,150,000 0.025)
b.
($6,000) + $28,750 = $22,750
c.
Accounts Receivable
$93,000
Less: Allowance for Uncollectible Accounts
Net Accounts Receivable
$70,250
28,750
28,750
22
Sept. 14
(22,750)
Accounts Receivable-Inga Corporation
3,000
Service Revenue 3,000
Oct. 14
Note Receivable-Inga Corporation 3,000
Accounts Receivable-Inga Corp.
3,000
Dec. 31
Interest Receivable
51
Interest Revenue 51
($3,000 0.08 78/365)
Jan. 12
3,059
Note Receivable 3,000
Interest Receivable
51
Interest Revenue 8
($3,000 0.08 12/365)
23)
a.
b.
c.
d.
Cash
2007
($58,000 +$46,000 + $54,000 - $3,500) / ($91,000 + $17,000 +
$ 4,500) = 1.37
2008
($45,000 + $39,000 + $61,000 - $5000) / ($102,000 + $25,000 +
$6,500) = 1.05
2007 ($50,000 - $2,500 - $54,000 + 3,500) / 2 = $49,000
($49,000 / $415,000) 365 = 43 days
2008 ($54,000 - $3,500 - $61,000 + $5,000) / 2 = $53,250
($53,250 / $525,000) 365 = 37 days
The acid test ratio deteriorated from 2007 to 2008.
The collection period from decreased 2007 to 2008.
24
Dec. 31
Supplies Expense 1,500
Supplies
1,500
31
Insurance Expense 800
Prepaid Insurance 800
31
Amortization Expense-Equipment
600
Accumulated Amortization-Equipment 600
31
Salary Expense
1,200
Salary Payable
1,200
31
Unearned Service Revenue
1,200
Service Revenue 1,200
25
Debt ratio before the bank loan = $100,000 / $200,000 = 0.50
Debt ratio after the bank loan = $175,000 / $275,000 = 0.64
The loan will not be granted since the debt ratio would exceed the amount
specified in the loan agreement of 0.60.
Navajo Products
Bank Reconciliation
September 30, 2009
BANK:
Balance, September 30, 2009
$ 11039
Add: Deposit of September 30 in transit
3057
14096
Less: Outstanding cheques
Cheque No.
1420
$ 1455
1421
300
1422
3401
Adjusted bank balance, September 30, 2009
(5156)
$ 8940
BOOKS:
Balance, September 30, 2009
Add: EFT collection of rent
Bank collection of note receivable
$ 7247
$ 938
2100
3038
6,856
Less:NSF cheque
EFT payment of insurance
Service charge
$ 662
510
38
Book error $6324 cheque
recorded as $6189
Adjusted book balance, September 30, 2009
135
(1345)
$ 8940