Chapter 4, Question 1Santos Charcuterie and BakeryAccountAccounts Receivable: House Accounts6,200 1,500 Accounts Receivable: Credit Cards12,300 Money in Cashiers Banks 5,000 Cash on Deposit in Local Bank80,200 Food Inventory17,850 Paper and Supplies Inventory5,175 Prepaid Expenses27,950 Santos Charcuterie and BakeryCurrent Assets$Cash85,200 Accounts Receivable Net17,000 Inventories23,025 Prepaid Expenses27,950 Total Current Assets153,175 Account Balance ($)Allowance for Doubtful House Accountsa. Why must Sean address the issue of allowances for doubtful house accounts if he is to accurately calculate his total current assets?Answer: Because the category of allowance for doubful accounts represents the portion of accounts receivable that may not be actually be collectable by Sean's business. It is important for Sean to also identify the reasonable amount of debt which is unlikely to recover.b. What are two examples of prepaid expenses Sean may have incurred and thus must address if he is to accurately calculate his total current assets? Answer: Two examples of prepaid expenses Sean may have incurred are prepaid insurance and prepaid rent.
Chapter 4, Question 2NEPTUNE SEAFOOD HOUSE DECEMBER 31, BALANCE SHEETTOTAL ASSETS$ 400,500 LIABILITIES AND OWNERS' EQUITYCurrent LiabilitiesAccounts Payable$ 26,100 Payroll Taxes Payable9,100 Sales Taxes Payable15,100 Gift Cards Payable2,400 Accrued Expenses9,100 Current Portion, Long-Term Debt13,600 Total Current Liabilities$ 75,400 Long Term Debt, net of Current Portion$ 150,250 Total Liabilities$ 225,650 Owners' EquityOriginal Investment $ 30,000 Retained Earnings$ 144,850 Total Equity$ 174,850 TOTAL LIABILITIES AND OWNERS' EQUITY$ 400,500 a. What is the amount of the operation’s Long Term Debt; net of Current Portion?Answer: It is $150,250.b. What is the amount of the operation’s Retained Earnings? Answer: It is $144,850.
Chapter 4, Question 3Balance Sheet Accounts: The Restaurant Kwan ManagesInvestments$373,256 Paid in Capital$486,486 Other Current Liabilities73,954 Accumulated Depreciation203,144Building627,998 Food Inventory31,818Accounts Payable213,659 Common Stock133,421Long-Term Debt395,315 Prepaid Expenses15,000Cash85,986 Retained Earnings477,500Furnishings and Equipment 308,334 Land309,080 Beverage Inventory15,125 Supplies Inventory3,850 Notes Payable47,858 Allowance for Doubtful Accounts4,000Marketable Securities196,154 Accounts Receivable23,721Dollar AmountsCash$85,986 Marketable Securities$196,154 Net Receivables19,721 Inventories50,793 Prepaid expenses15,000 Total Current Assets$367,654 Current Asset Accounts (In Order of Liquidity)a. What is the amount of the operation's total current assets?Answer: It is $367,654=.b. What is the first current asset account listed and why is it listed first?Answer: Cash is the first current asset account listed, because current assets are listed on the balance sheet in order of their liquidity and cash is the most liquid.