Chap005 - Accounting for and Presentation of Current Assets...

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Unformatted text preview: Accounting for and Presentation of Current Assets SOLUTIONS: E5-1. Balance per bank.................... $373 Balance per books......................... $844 Less: Outstanding checks Less: NSF check. ......................... (75) ($13 + $50).......................... (63) Error in recording check Add: Deposit in transit....................... 450 (as $56 instead of $65)............. (9) Reconciled balance................. $760 Reconciled balance...................... $760 E5-2. Balance per bank..................... $1,860 Balance per books........................ $1,698 Less: Outstanding Less: Check charge..................... (6) checks.................................. (315) Add: Interest earned..................... 18 Add: Deposit in transit....................... 210 Error in recording payment......... 45 Reconciled balance................. $1,755 Reconciled balance...................... $1,755 E5-3. a. Dr. Accounts Receivable (for NSF check) .................................... $75 Dr. Expense (or other account originally debited for error )......... 9 Cr. Cash.................................................................................... $84 Balance Sheet Income Statement Assets = Liabilities + Owners Equity Net income = Revenues - Expenses Accounts Expense Receivable (or other +75 account) Cash - 9- 84 b. The cash amount to be shown on the balance sheet is the $760 reconciled amount. E5-4. a. Dr. Cash ....................................................................................... $57 Dr. Miscellaneous Expense (check charge).................................. 6 Cr. Interest Revenue ................................................................ $18 Cr. Accounts Payable............................................................... 45 Balance Sheet Income Statement Assets = Liabilities + Owners Equity Net income = Revenues - Expenses Cash Acc. Pay. Int.Rev. Misc.Exp. +57 +45 +18 - 6 b. The cash amount to be shown on the balance sheet is the $1,755 reconciled amount. E5-5. Allowance for Bad Debts Bad debt write-offs 1/1/02 balance..................... $13,400 (from 1/1 to 11/30)................ ? Bad debt expense Chapter 5 (from 1/1 to 11/30).......... 21,462 1/30/02 balance...................... $ 9,763 Adjustment required (11/30/02). ? 12/31/02 balance................. $ 9,500 a. Solution approach : The bad debt write-offs from January through November can be determined by subtracting the November 30 balance from the total of the beginning balance and the bad debts expense recognized for the first 11 months. Bad debt write-offs = $13,400 + $21,462 - $9,763 = $25,099 b. The adjustment required at December 31, 2002 can be determined by comparing the November 30 balance in the allowance account to the desired ending balance....
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This note was uploaded on 04/04/2009 for the course ACC ACC/539 taught by Professor Michaeldonohoe during the Fall '05 term at University of Phoenix.

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Chap005 - Accounting for and Presentation of Current Assets...

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