the cash transactions and cash balances of dodge inc for november were as follows 1 1323175

The cash transactions and cash balances of Dodge, Inc., for November were as follows:

1.    The ledger account for Cash showed a balance at November 30 of $6,750.

2.    The November bank statement showed a closing balance of $4,710.

3.    The cash received on November 30 amounted to $3,850. It was left at the bank in the night depository chute after banking hours on November 30 and therefore was not recorded by the bank on the November statement.

4.    Also included with the November bank statement was a debit memorandum from the bank for

$15 representing service charges for November.

5.    A credit memorandum enclosed with the November bank statement indicated that a non- interest-bearing note receivable for $4,000 from Wright Sisters, left with the bank for collec- tion, had been collected and the proceeds credited to the account of Dodge, Inc.

6.    Comparison of the paid checks returned by the bank with the entries in the accounting records revealed that check no. 810 for $430, issued November 15 in payment for computer equip- ment, had been erroneously entered in Dodge’s records as $340.

7.    Examination of the paid checks also revealed that three checks, all issued in November, had not yet been paid by the bank: no. 814 for $115; no. 816 for $170; no. 830 for $530.

8.    Included with the November bank statement was a $2,900 check drawn by Steve Dial, a cus- tomer of Dodge, Inc. This check was marked “NSF.” It had been included in the deposit of November 27 but had been charged back against the company’s account on November 30.

 

Instructions

a.       Prepare a bank reconciliation for Dodge, Inc., at November 30.

b.       Prepare journal entries (in general journal form) to adjust the accounts at November 30. Assume that the accounts have not been closed.

c.        State the amount of cash that should be included in the balance sheet at November 30.

jason chain saws inc had poor internal control over its cash transactions facts abou 1323176

Jason Chain Saws, Inc., had poor internal control over its cash transactions. Facts about the company’s cash position at April 30 are described below.

The accounting records showed a cash balance of $20,325, which included a deposit in tran- sit of $5,000. The balance indicated in the bank statement was $14,300. Included in the bank statement were the following debit and credit memoranda:

 

 

 

 

Debit Memoranda:

Check from customer, deposited

 

but charged back as NSF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$  125

Bank service charges for April . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Credit Memorandum:

50

Proceeds from collection of a note receivable on company’s behalf . . . . . . . . . . . . . .

$6,200

 

 

Outstanding checks as of April 30 were as follows:

 

 

Check No.

Amount

836 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$  500

842 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

440

855 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

330

859 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,300

 

 

                                                                                                                                                                                                                       

Tom Crook, the company’s cashier, has been taking portions of the company’s cash receipts for several months. Each month, Crook prepares the company’s bank reconciliation in a manner that conceals his thefts. His bank reconciliation for April is illustrated as follows:

 

Balance per bank statement, April 30. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Add: Deposits in transit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

 

 

$7,120

$14,300

Collection of note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  6,200

  13,320

Subtotal  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less: Outstanding checks:

No. 836 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

 

 

 

$  500

$27,620

No. 842 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

440

 

No. 855 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

      330

    1,270

Adjusted cash balance per bank statement . . . . . . . . . . . . . . . . . . . . . . . .

 

$26,350

Balance per accounting records, April 30. . . . . . . . . . . . . . . . . . . . . . . . . .

 

20,325

Add: Credit memorandum from bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

 

    6,200

Subtotal  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less: Debit memoranda from bank:

NSF check  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

 

 

 

$  125

$26,525

Bank service charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

        50

       175

Adjusted cash balance per accounting records . . . . . . . . . . . . . . . . . . . . .

 

$26,350

 

Instructions

a.       Determine the amount of cash shortage that has been concealed by Crook in his bank rec- onciliation. (As a format, we suggest that you prepare the bank reconciliation correctly. The amount of the shortage then will be the difference between the adjusted balances per the bank statement and per the accounting records. You can then list this unrecorded cash shortage as the final adjustment necessary to complete your reconciliation.)

b.       Carefully review Crook’s bank reconciliation and explain in detail how he concealed the amount of the shortage. Include a listing of the dollar amounts that were concealed in various ways. This listing should total the amount of shortage determined in part a.

c.        Suggest some specific internal control measures that appear to be necessary for Jason Chain Saws, Inc.

 

starlight a broadway media firm uses the balance sheet approach to estimate uncollec 1323177

Starlight, a Broadway media firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end an aging of the accounts receivable produced the following five groupings:

 

 

 

 

 

a.  Not yet due. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$500,000

b.  1–30 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

110,000

c.  31–60 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

50,000

d.  61–90 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30,000

e.  Over 90 days past due. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    60,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$750,000

 

 

On the basis of past experience, the company estimated the percentages probably uncollectible for the above five age groups to be as follows: Group a, 1 percent; Group b, 3 percent; Group c, 10 percent; Group d, 20 percent; and Group e, 50 percent.

The Allowance for Doubtful Accounts before adjustments at December 31 showed a credit bal- ance of $4,700.

 

Instructions

a.       Compute the estimated amount of uncollectible accounts based on the above classification by age groups.

b.       Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount.

 

 

 

 

c.        Assume that on January 18 of the following year, Starlight learned that an account receivable that had originated on August 1 in the amount of $1,600 was worthless because of the bank- ruptcy of the client, May Flowers. Prepare the journal entry required on January 18 to write off this account.

d.       The firm is considering the adoption of a policy whereby clients whose outstanding accounts become more than 60 days past due will be required to sign an interest-bearing note for the full amount of their outstanding balance. What advantages would such a policy offer?

 

walc factory is a manufacturer that makes all sales on 30 day credit terms annual sa 1323178

Walc Factory is a manufacturer that makes all sales on 30-day credit terms. Annual sales are approximately $20 million. At the end of 2010, accounts receivable were presented in the com- pany’s balance sheet as follows:

 

Accounts receivable from clients  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $1,800,000

Less: Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               40,000

 

 

During 2011, $115,000 of specific accounts receivable were written off as uncollectible. Of these accounts written off, receivables totaling $9,000 were subsequently collected. At the end of 2011, an aging of accounts receivable indicated a need for a $75,000 allowance to cover possible failure to collect the accounts currently outstanding.

Walc Factory makes adjusting entries for uncollectible accounts only at year-end.

 

Instructions

a.       Prepare the following general journal entries:

1.       One entry to summarize all accounts written off against the Allowance for Doubtful Accounts during 2011.

2.       Entries to record the $9,000 in accounts receivable that were subsequently collected.

3.       The adjusting entry required at December 31, 2011, to increase the Allowance for Doubt- ful Accounts to $75,000.

b.       Notice that the Allowance for Doubtful Accounts was only $40,000 at the end of 2010, but uncollectible accounts during 2011 totaled $106,000 ($115,000 less the $9,000 reinstated). Do these relationships appear reasonable, or was the Allowance for Doubtful Accounts greatly understated at the end of 2010? Explain.

 

at december 31 2010 westport manufacturing co owned the following investments in the 1323179

At December 31, 2010, Westport Manufacturing Co. owned the following investments in the capi- tal stock of publicly owned companies (all classified as available-for-sale securities):

 

 

 

 

Lamb Computer, Inc. (1,000 shares: cost,

 

Current Market

Cost          Value

 

 

                                  

per share; market value, $8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  45,000

 

  40,000

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$75,000

 

$90,000

 

 

$30 per share; market value, $50)  . . . . . . . . . . . . . . . . . . . . . . . . . . .              $30,000   $50,000 Dry Foods (5,000 shares: cost, $9

 

 

 

 

In 2011, Westport engaged in the following two transactions:

Apr.  6     Sold 100 shares of its investment in Lamb Computer at a price of $55 per share, less a brokerage commission of $20.

Apr. 20     Sold 2,500 shares of its Dry Foods stock at a price of $7 per share, less a brokerage commission of $20.

At December 31, 2011, the market values of these stocks were: Lamb Computer, $40 per share; Dry Foods, $7.

 

 

                                                                                                                                                                                                                       

 

Instructions

a.       Illustrate the presentation of marketable securities and the unrealized holding gain or loss in Westport’s balance sheet at December 31, 2010. Include a caption indicating the section of the balance sheet in which each of these accounts appears.

b.       Prepare journal entries to record the transactions on April 6 and April 20.

c.       Prior to making a fair value adjustment at the end of 2011, determine the unadjusted balance in the Marketable Securities controlling account and the Unrealized Holding Gain (or Loss) on Investments account. (Assume that no unrealized gains or losses have been recognized since last year.)

d.       Prepare a schedule showing the cost and market values of securities owned at the end of 2011. (Use the same format as the schedule illustrated above.)

e.       Prepare the fair value adjusting entry required at December 31, 2011.

f.       Illustrate the presentation of the marketable securities and unrealized holding gain (or loss) in the balance sheet at December 31, 2011. (Follow the same format as in part a.)

g.       Illustrate the presentation of the net realized gains (or losses) in the 2011 income statement. Assume a multiple-step income statement and show the caption identifying the section in which this amount would appear.

h.       Explain how both the realized and the unrealized gains and losses will affect the company’s 2011 income tax return.