Intermediate Accounting WK5

E7-1

1 . CORRECT BALANCE OF CASH AND CASH EQUIVALENTS REPORTED IN THE CURRENT ASSETS OF THE BALANCE SHEET

a . First bank checking account 13 ,500

a . First bank savings account 22 ,100

b . Undeposited customer checks 5 ,200

c . Currency and coins on hand 580

f . U .S treasury bills (2 months maturity 15 ,000

f . U .S treasury bills (7 months maturity 20 ,000

CORRECT BALANCE OF CASH AND CASH EQUIVALENTS 76 ,380

2 . REASONS AND CLASSIFICATIONS OF ITEMS WHICH ARE NOT INCLUDED

d . Savings account of 400

,000 is not reported in the cash and cash equivalents because this Cash restricted for future plant expansion and reported as non current assets

e . It is reported as restriction and a liability because the bank instructs not to with draw any funds until 2012

E7-6

1 . Merchandise returns 450 ,000

Accounts receivable 450 ,000 (To record the merchandise returns

Accounts receivable 460 ,000- 450 ,000 10 ,000

Sales returns (W-1 10 ,000 (To adjust the estimated returns

W-1

Estimated 11 ,500 ,000 x 4 460 ,000

Less : Actual 450 ,000

Adjusted estimated returns 10 ,000

2 . Allowance for Sales Returns (opening 300 ,000

Add : Estimated 11 ,500 ,000 x 4 460 ,000

Less : Adjusted estimated returns 10 ,000

Allowance for Sales Returns (ending 750 ,000

E7-7

1 . Bade debts expense 4 ,500 ,000 x 1 .5 67 ,500

2 . COMPUTATION OF ACCOUNTS RECEIVABLE WRITE OFF

Allowance for uncollectible (opening credit balance 42 ,000

Add : Adjustment of allowance for uncollectible (W-1...