2.What is the net realizable value of accounts receivable? .
a.1,970,000 b.1,820,000 c.1,800,000 d.1,950,000
3.What is the adjusted inventory?
4.What total amount of current assets should be reported?
Page
4
SOLUTION
–
PROBLEM
2
Question
1
Answer
D
Cash on hand
130,000
Customer postdated check
(
20,000)
Employee IOU
(
10,000)
Adjusted cash on hand
100,000
Cash in bank per bank statement
370,000
Outstanding checks
(
70,000)
300,000
Adjusted cash balance
400,000
Question
2
Answer
B
Customers’ debit balances
1,900,000
Customer deposit erroneously netted
50,000
Customer postdated check
20,000
Accounts receivable
1,970,000
Allowance for doubtful accounts
(
150,000)
Net realizable value
1,820,000
Question
3
Answer
C
Inventory per book
2,000,000
Undelivered goods incorrectly excluded from inventory (750,000 / 150%)
500,000
Adjusted inventory
2,500,000
Question
4
Answer
B
Cash
400,000
Accounts receivable, net of allowance
1,820,000
Advances to employee - IOU
10,000
Inventory
2,500,000
Prepaid expenses
100,000
Total current assets
4,830,000
