ch07 - SOLUTIONS TO B EXERCISES E7-1B (1015 minutes) (a)...

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Unformatted text preview: SOLUTIONS TO B EXERCISES E7-1B (1015 minutes) (a) Cash includes the following: 1. Commercial savings account First National Bank of Yojimbo $ 1,200,000 1. Commercial checking account First National Bank of Yojimbo 1,800,000 2. Money market fund Nguyen Co. 10,000,000 5. Petty cash 2,000 12. Currency and coin on hand 15,400 Cash reported on December 31, 2007, balance sheet $13,017,400 (b) Other items classified as follows: 3. Travel advances (reimbursed by employee)* should be reported as receivableemployee in the amount of $360,000. 4. Cash restricted in the amount of $3,000,000 for the retirement of long-term debt should be reported as a noncurrent asset identified as Cash restricted for retirement of long-term debt. 6. An IOU from Nyamaan should be reported as a receivable in the amount of $380,000. 7. The bank overdraft of $220,000 should be reported as a current liability.** 8. Certificates of deposits of $1,000,000 each should be classified as temporary investments. 9. Postdated check of $250,000 should be reported as an accounts receivable. 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. 11. Commercial paper should be reported as temporary investments. *If not reimbursed, charge to prepaid expense. **If cash is present in another account in the same bank on which the overdraft occurred, offsetting is required. 7-1 E7-2B (1015 minutes) Computation of cost of goods sold: Merchandise purchased $325,000 Less: Ending inventory 95,000 Cost of goods sold $230,000 Selling price = 1.5 (Cost of good sold) = 1.5 ($230,000) = $345,000 Sales on account $345,000 Less collections 203,000 Uncollected balance 142,000 Balance per ledger 87,000 Apparent shortage $ 55,000 Enough for a new car E7-3B (1520 minutes) (a) (1) June 3 Accounts ReceivablePham Inc. ............. 1,500 Sales.................................................... 1,500 June 12 Cash.............................................................. ....................................................................... 1,470 Sales Discounts ($3,000 X 2%)................... 30 Accounts ReceivablePham........... 1,500 (2) June 3 Accounts ReceivablePham..................... 1,470 Sales ($3,000 X 98%).......................... 1,470 June 12 Cash.............................................................. ....................................................................... 1,470 Accounts ReceivablePham........... 1,470 (b) July 29 Cash............................................................... ...........................................................................
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ch07 - SOLUTIONS TO B EXERCISES E7-1B (1015 minutes) (a)...

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