Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 10, Problem 1CPP
1.
To determine
Comprehensive Problem
To Record: The journal entries.
1.
Expert Solution
Explanation of Solution
The following are the journal entries.
2016 | Particulars | Debit ($) | Credit ($) | |
January | 3 | Petty Cash | 4,500 | |
Cash | 4,500 | |||
February | 26 | Office Supplies | 1,680 | |
Miscellaneous Selling Expense | 570 | |||
Miscellaneous Administrative Expense | 880 | |||
Cash | 3,130 | |||
April | 14 | Inventory | 31,300 | |
Accounts Payable | 31,300 | |||
May | 13 | Accounts Payable | 31,300 | |
Cash | 31,300 | |||
17 | Cash | 21,200 | ||
Cash Short and Over | 40 | |||
Sales | 21,240 | |||
June | 2 | Notes Receivable | 180,000 | |
Accounts Receivable | 180,000 | |||
August | 1 | Cash | 182,400 | |
Notes Receivable | 180,000 | |||
Interest Revenue | 2,400 | |||
24 | Cash | 7,600 | ||
Allowance for Doubtful Accounts | 1,400 | |||
Accounts Receivable | 9,000 | |||
September | 15 | Accounts Receivable | 1,400 | |
Allowance for Doubtful Accounts | 1,400 | |||
15 | Cash | 1,400 | ||
Accounts Receivable | 1,400 | |||
September | 15 | Land | 654,925 | |
Interest Expense | 15,075 | |||
Notes Payable | 670,000 | |||
October | 17 | Cash | 135,000 | |
Notes Receivable | 100,000 | |||
64,000 | ||||
Loss on Sale of Office Equipment | 21,000 | |||
Office Equipment | 320,000 | |||
November | 30 | Sales Salaries Expense | 135,000 | |
Office Salaries Expense | 77,250 | |||
Employees Income Tax Payable | 39,266 | |||
Social Security Tax Payable | 12,735 | |||
Medicare Tax Payable | 3,184 | |||
Salaries Payable | 157,065 | |||
30 | Payroll Tax Expense | 16,229 | ||
Social Security Tax Payable | 12,735 | |||
Medicare Tax Payable | 3,184 | |||
State |
270 | |||
Federal Unemployment Tax Payable | 40 | |||
December | 14 | Notes Payable | 670,000 | |
Cash | 670,000 | |||
31 | Pension Expense | 190,400 | ||
Cash | 139,700 | |||
Unfunded Pension Liability | 50,700 |
Table (1)
2.
To determine
To Prepare: The
2.
Expert Solution
Explanation of Solution
Prepare the bank reconciliation statement for Company K.
K Company | ||
Bank Reconciliation December 31, 2016 | ||
Particulars | Amount ($) | Amount ($) |
Balance according to bank statement | 283,000.00 | |
Adjustments: | ||
Deposit in transit, not recorded by bank | 29,500.00 | |
Deduct outstanding checks | (68,540.00) | |
Total adjustments | (39,040.00) | |
Adjusted balance | 243,960.00 | |
Balance according to company’s records | 245,410.00 | |
Adjustments: | ||
Bank service charges | (750.00) | |
Error in recording check | (700.00) | |
Total adjustments | (1,450.00) | |
Adjusted balance | 243,960.00 |
Table (2)
3.
To determine
To Record: The bank service charges using miscellaneous administrative expense account.
3.
Expert Solution
Explanation of Solution
Record the
2016 | Particulars | Debit ($) | Credit ($) | |
December | 31 | Miscellaneous Expense | 750 | |
Accounts Payable | 700 | |||
Cash | 1,450 |
Table (3)
- Miscellaneous expense is an expense account and it decreases the value of equity by $750. Therefore, debit miscellaneous expense account with $750.
- Accounts payable is a liability and it is decreased by $700. Therefore, debit accounts payable account with $700.
- Cash is an asset and it is decreased by $1,450. Therefore, credit cash account with $1,450.
4.
To determine
To Record: The
4.
Expert Solution
Explanation of Solution
Record the adjusting entries.
2016 | Particulars | Amount ($) | Amount ($) | |
a | 31-Dec | 18,000 | ||
Allowance for Doubtful Accounts | 18,000 | |||
To record estimated uncollectible accounts | ||||
b | 31-Dec | Cost of Goods Sold | 3,300 | |
Inventory | 3,300 | |||
To record inventory shrinkage. | ||||
c | 31-Dec | Insurance Expense | 22,820 | |
Prepaid Insurance | 22,820 | |||
To record expired insurance. | ||||
d | 31-Dec | Office Supplies Expense | 3,920 | |
Office Supplies | 3,920 | |||
To record supplies used during the period. | ||||
e | 31-Dec | 36,000 | ||
Depreciation Expense—Office Equipment | 44,000 | |||
Depreciation Expense—Store Equipment | 5,000 | |||
Accumulated Depreciation—Buildings | 36,000 | |||
Accumulated Depreciation—Office Equipment | 44,000 | |||
Accumulated Depreciation—Store Equipment | 5,000 | |||
To record depreciation for the period. | ||||
2016 | Particulars | Amount ($) | Amount ($) | |
f | 31-Dec | Amortization Expense—Patents | 6,000 | |
Patents | 6,000 | |||
To record patent amortization | ||||
g | 31-Dec | Depletion Expense | 30,000 | |
Accumulated Depletion | 30,000 | |||
To record depletion. | ||||
h | 31-Dec | Vacation Pay Expense | 10,500 | |
Vacation Pay Payable | 10,500 | |||
To record vacation pay for the period. | ||||
i | 31-Dec | Product Warranty Expense | 76,000 | |
Product Warranty Payable | 76,000 | |||
To record product warranty for the period. | ||||
j | 31-Dec | Interest Receivable | 1,875 | |
Interest Revenue | 1,875 | |||
To record interest earned on note receivable. |
Table (4)
5.
To determine
To Prepare: The balance sheet as at December 31, 2016 of Company K.
5.
Expert Solution
Explanation of Solution
Prepare the balance sheet.
K Company | |||
Balance Sheet | |||
As on December 31, 2016 | |||
Assets | Amount ($) | Amount ($) | Amount ($) |
Current assets: | |||
Petty cash | 4,500 | ||
Cash | 243,960 | ||
Notes receivable | 100,000 | ||
Accounts receivable | 470,000 | ||
Allowance for doubtful accounts | (16,000) | ||
Accounts receivable, net | 454,000 | ||
Inventory | 320,000 | ||
Interest receivable | 1,875 | ||
Prepaid insurance | 45,640 | ||
Office supplies | 13,400 | ||
Total current assets | 1,183,375 | ||
Property, plant, and equipment: | |||
Land | 654,925 | ||
Buildings | 900,000 | ||
Accumulated depreciation—buildings | (36,000) | ||
Book value—buildings | 864,000 | ||
Office equipment | 246,000 | ||
Accumulated depreciation— office equipment | (44,000) | ||
Book value—office equipment | 202,000 | ||
Store equipment | 112,000 | ||
Accumulated depreciation— store equipment | (5,000) | ||
Book value—store equipment | 107,000 | ||
Mineral rights | 546,000 | ||
Accumulated depletion—mineral rights | (30,000) | ||
Book value—mineral rights | 516,000 | ||
Total property, plant, and equipment Intangible assets: | 2,343,925 | ||
Patents | 42,000 | ||
Total assets | 3,569,300 | ||
Liabilities | |||
Current liabilities: | |||
Social security tax payable | 25,470 | ||
Medicare tax payable | 4,710 | ||
Employees federal income tax payable | 40,000 | ||
State unemployment tax payable | 270 | ||
Federal unemployment tax payable | 40 | ||
Salaries payable | 157,000 | ||
Accounts payable | 131,600 | ||
Interest payable | 28,000 | ||
Product warranty payable | 76,000 | ||
Vacation pay payable (current portion) | 7,140 | ||
Notes payable (current portion) | 70,000 | ||
Total current liabilities | 540,230 | ||
Long-term liabilities: | |||
Vacation pay payable | 3,360 | ||
Unfunded pension liability | 50,700 | ||
Notes payable | 630,000 | ||
Total long-term liabilities | 684,060 | ||
Total liabilities | 1,224,290 | ||
Common stock | 500,000 | ||
Retained earnings | 1,845,010 | ||
Total stockholders’ equity | 2,345,010 | ||
Total liabilities and stockholders’ equity | 3,569,300 |
Table (5)
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The following information relates to Sunland Limited's Cash account. The reconciled cash balance from June's bank reconciliation is
$25,100. During the month of July, Sunland recorded cash receipts of $28,260 and cash payments of $15,670 in the general ledger
Cash account. At July 31, Sunland Limited had an reconciled cash balance of $37,690. An examination of the company's July bank
statement shows a balance of $19,547 on July 31; outstanding cheques $3,917; deposits in transit $1,737; EFT collections on account
that were not yet recorded on the books $2,189; NSF cheque $1,251; NSF fee $69; and bank service charges $109.
Prepare the necessary journal entries required on July 31 for Sunland. (List all debit entries before credit entries. Credit account titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and
enter O for the amounts.)
Date
Account…
Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y5 , were as follows:
Instructions
1. Journalize the selected transactions.
2. Based on the following data, prepare a bank reconciliation for December of the current year:
Balance according to the bank statement at December 31, $283,000.
Balance according to the ledger at December 31, $245,410.
Checks outstanding at December 31. $68,540.
Deposit in transit, not recorded by bank, $29,500.
Bank debit memo for service charges , $750.
A check for $12,700 in payment of an invoice was incorrectly recorded in the accounts as $12,000.
3. Based on the bank reconciliation prepared in (2), journalise the entry or entries to be made by Kornett Company.Use the Miscellaneous Administrative Expense account to record bank service charges.
4. Based on the following selected data, journalize the adjusting entries as of December 31 of the current year:
A. Estimated uncollectible accounts at December…
Instructions
The following data were gathered to use in reconciling the bank account of Donovan Company:
Balance per bank
$14,385
Balance per company records
11,200
Bank service charges
60
Deposit in transit
2,125
NSF check
1,480
Outstanding checks
6,850
Required:
a.
What is the adjusted balance on the bank reconciliation?
b.
On March 1, journalize any necessary entries for Donovan Company based on the bank reconciliation. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
Journal
b. On March 1, journalize any necessary entries for Donovan Company based on the bank reconciliation. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line…
Chapter 10 Solutions
Financial & Managerial Accounting
Ch. 10 - Does a discounted note payable provide credit...Ch. 10 - Employees are subject to taxes withheld from their...Ch. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - To match revenues and expenses properly, should...Ch. 10 - Prob. 8DQCh. 10 - When should the liability associated with a...Ch. 10 - Prob. 10DQ
Ch. 10 - Proceeds from notes payable On October 12,...Ch. 10 - Proceeds from notes payable On January 26, Nyree...Ch. 10 - Prob. 10.2APECh. 10 - Prob. 10.2BPECh. 10 - Prob. 10.3APECh. 10 - Prob. 10.3BPECh. 10 - Prob. 10.4APECh. 10 - Prob. 10.4BPECh. 10 - Prob. 10.5APECh. 10 - Prob. 10.5BPECh. 10 - Prob. 10.6APECh. 10 - Prob. 10.6BPECh. 10 - Prob. 10.7APECh. 10 - Prob. 10.7BPECh. 10 - Quick ratio Nabors Company reported the following...Ch. 10 - Quick ratio Adieu Company reported the following...Ch. 10 - Current liabilities Bon Nebo Co. sold 25,000...Ch. 10 - Entries for discounting notes payable Griffin...Ch. 10 - Evaluating alternative notes A borrower has two...Ch. 10 - Entries for notes payable A business issued a...Ch. 10 - Entries for discounted note payable A business...Ch. 10 - Prob. 10.6EXCh. 10 - Prob. 10.7EXCh. 10 - Calculate payroll An employee earns 32 per hour...Ch. 10 - Prob. 10.9EXCh. 10 - Prob. 10.10EXCh. 10 - Payroll tax entries According to a summary of the...Ch. 10 - Prob. 10.12EXCh. 10 - Prob. 10.13EXCh. 10 - Prob. 10.14EXCh. 10 - Prob. 10.15EXCh. 10 - Accrued vacation pay A business provides its...Ch. 10 - Pension plan entries Yuri Co. operates a chain of...Ch. 10 - Prob. 10.18EXCh. 10 - Accrued product warranty Lowe Manufacturing Co....Ch. 10 - Prob. 10.20EXCh. 10 - Prob. 10.21EXCh. 10 - Quick ratio Gmeiner Co. had the following current...Ch. 10 - Prob. 10.23EXCh. 10 - Liability transactions The following items were...Ch. 10 - Entries for payroll and payroll taxes The...Ch. 10 - Wage and tax statement data on employer FICA tax...Ch. 10 - Payroll register The following data for Throwback...Ch. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 10.1BPRCh. 10 - Entries for payroll and payroll taxes The...Ch. 10 - Prob. 10.3BPRCh. 10 - Prob. 10.4BPRCh. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 1CPPCh. 10 - Ethics and professional conduct in business Tonya...Ch. 10 - Prob. 10.2CPCh. 10 - Prob. 10.3CPCh. 10 - Prob. 10.5CP
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- Problem 1: The bank statement for Strivers, Inc. shows a balance of $9,410 on July 31, while the cash-in-bank account in Striver's books has a balance of $6,625 on this date, after all cash activity for the month July had been posted. Prepare a bank reconciliation based on the starting balances above, and the following additions and deductions: a) Checks outstanding, $3,113 b) Deposits still in transit, $1,733 c) Checking account service charges, $38. d) A note receivable was collected by the bank, $1,850 (this amount includes interest revenue of $50). e) A check marked 'NSF' for $425 was returned; the customer was supposedly paying Strivers on account. f) A check for $746 paid on account by Strivers, on July 15th had been incorrectly recorded in Strivers general journal as $764. Problem 2: Prepare the two journal entries that are required by the just completed reconciliation from Problem 1, above, for July 31.arrow_forwardProblem 1 - Prepare a bank reconciliationThe following information relates to M Park Corporation for the month of March 2022:1. Cash balance per books, March 31 was $20,647.002. Deposits in transit, March 31 were $8,140.003. The March bank service charge was $34.00 and has not been recorded by the company.4. Outstanding checks, March 31 were $3,905.005. An electronic funds transfer (EFT) collected by the bank was $590. The collection has not been recorded by M Park Corporation.6. The bank made an error and recorded a $3,000 deposit twice.7. Cash balance per bank, March 31 was $19,968.00PurposeThe purpose of this problem is to demonstrate an understanding of preparing a bank reconciliation.InstructionsAfter analyzing the data, prepare a bank reconciliation for M Park Corporation at March 31st. Reconcile the cash balance per the bank firstand list items that increase the cash balance first. Also, round amounts to two decimal places. Please provide explainations, thanks! (arrow_forward
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