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Vertical and horizontal analyses are concerned with the format used to prepare financial
statements.
Answer:
The following information was used to prepare the March 2015, bank reconciliation for
Walker Machine Works. Identify the items that require adjustment to the cash balance
per books and prepare the appropriate adjusting entries.
1> Included with the bank statement materials was a check from Bob Simpson for $40
stamped "NSF."
2> A personal deposit by Annie Walker to her personal account in the amount of $300
for dividends on her General Electric common stock was credited to the company
account.
3> The bank statement included a debit memorandum for $22.00 for two books of
blank checks for Walker Machine Works.
4> The bank statement contains a credit memorandum for $24.75 interest on the
average checking account balance.
5> The daily deposits of March 30 and March 31, for $3,362 and $3,125 respectively,
were not included in the bank statement postings.
6> Two checks totaling $316.86, which were outstanding at the end of February, cleared
in March and were returned with the March statement.
7> The bank statement included a credit memorandum dated March 28, 2015, for
$45.00 for the monthly interest on a 6-month, $15,000 certificate of deposit that the
company owns.
8> Four checks, #8712, #8716, #8718, #8719, totaling $5,369.65, did not clear the bank
during March.
9> On March 24, 2015, Walker Machine Works delivered to the bank for collection a
$4,500,
3-month note from Don Decker. A credit memorandum dated March 29, 2015, indicated
the collection of the note and $90.00 of interest.
10> The bank statement included a debit memorandum for $25.00 for the collection
service on the above note and interest.
Answer:
The monetary unit assumption states that transactions that can be measured in terms of
money should be recorded in the accounting records.
Answer:
The accounting cycle begins at the start of a new accounting period.
Answer:
Income will always be greater under the cash basis of accounting than under the accrual
basis of accounting.
Answer:
Purchase Returns and Allowances and Purchase Discounts are subtracted from
Purchases to produce net purchases.
Answer:
Presented below is information for Annie Company for the month of March 2015.
Instructions
[a] Prepare a multiple -step income statement.
[b] Compute the gross profit rate.
Answer:
When the due date of a note is stated in months, the time factor in computing interest is
the number of months divided by 360 days.
Answer:
Parker Company has 24,000 shares of $1 par common stock issued and outstanding.
The company also has 2,000 shares of $100 par 5% cumulative preferred stock
outstanding. The company did not pay the preferred dividends in 2014 or 2015. What
amount of dividends must the company pay the preferred shareholders in 2016 if they
wish to pay the common stockholders a dividend?
Answer:
For efficiency of operations and better control over cash, a company should maintain
only one bank account.
Answer:
