Ex. 7.13 a.
c. Jan. 4 520,000
Marketable Securities …………………
180,000
Gain on Sale of Investments ……………
The amount of unrealized holding gain included in the securities’ current market
value will appear as an element of stockholders’ equity. The securities also will
investments.
Cash ……………………………………………
a.
2015
Aug. 1 1.
Dec. 31 2.
2016
Jan. 31 4.
Net
Revenue
Expenses = Income Assets = Equity
NE NE NE NE NE
INEII I
Accounts Receivable (Dusty Roads) …………………………
37,620
Dusty Roads. Total interest amounts to $1,620 ($36,000 ×
9% × ½), of which $270 was earned in 2016.
b.Transaction
1. NE
Liabilities +
270
To record default by Dusty Roads on six-month note
receivable.
Notes Receivable ……………………………………………
2. NE
Interest Revenue ……………………………………………
Interest Receivable …………………………………………
36,000
Notes Receivable ……………………………………………
Interest Receivable …………………………………………
Cash ……………………………………………………………
Interest Revenue ……………………………………………
Interest Revenue ……………………………………………
Accepted a six-month, 9% note receivable in settlement of
an account receivable on August 1, 2015.
Accounts Receivable (Dusty Roads) ………………………
36,000
Interest Receivable ……………………………………………
1,350
Ex. 7.14
Notes Receivable ………………………………………………
36,000
Ex. 7.15 a.
b.
c.
Financial assets = $3.889 billion
The company does not report any investments in marketable securities. If Home
Depot had such investments, unrealized gains and losses would be included in a
separate stockholders’ equity account.
The company’s allowance for uncollectible accounts (referred to in the footnotes as
25 Minutes, Medium
a.
114,828$ 16
,
000
130
,
828
$
,
$
,
$
p
$
$
,
$
$
,
$
SOLUTIONS TO PROBLEMS SET A
PROBLEM 7.1
A
BANNER, INC.
July 31
Bank Reconciliation
BANNER, INC.
Balance per bank statement, July 31
Deduct: Outstandin
g
checks
Add: De
p
osit in transit
no. 814
$
45 Minutes, Strong
a. Corrected bank reconciliation for November:
Balance per bank statement, November 30 20,600$ 1
,
245
21
,
845
$
400
$
524 176
5
,
000 6
,
100
15
,
745
$
,
,
$
$
j
p
,
$
,
,
$
j
p
$
,
,
,
,
$
,
$
PROBLEM 7.2
A
OSAGE FARM SUPPL
Y
November 30
BANK RECONCILIATION
OSAGE FARM SUPPL
Y
Add: De
p
osit in transit
Subtotal
Less: Outstandin
g
checks:
no. 8231
no. 8263
Ad
j
usted cash balance
p
er bank statement
no. 8288
no. 8294
Total outstandin
g
checks
,
$
c.
Problem 7.2A
OSAGE FARM SUPPLY (concluded)
Two weaknesses in internal control are apparent. First, the bank account should be
reconciled by someone with no other responsibilities for cash transactions, not by the
statement with the daily totals in the special journals used to record cash receipts.
15 Minutes, Medium
a.
Percentage Estimated
Considered Uncollectible
Amount Uncollectible Accounts
250,000$ 1% 2,500$
105,000 3% 3,150
b.
Dec 31 12,750
12,750
a. Not yet due
PROBLEM 7.3
A
Accounts Receivable by Age Group
PUTNAM & PUTNAM
b. 1-30 days past due
To increase the valuation account to the estimated
General Ledger
Allowance for Doubtful Accounts
Uncollectible Accounts Expense
required total of $18,650 computed as follows:
30 Minutes Medium
Var.* 165,000
Accounts Receivable 165,000
Var.* 15,000
Allowance for Doubtful Accounts 15,000
PROBLEM 7.4
A
a.
General Journal
WILCOX MILLS
throughout the year.
Allowance for Doubtful Accounts
Entry summarizing the write-off of receivables
2015
Accounts Receivable
Entry summarizing the reinstatement of accounts
proving to be collectible.
40 Minutes, Strong
a. Marketable securities
(
cost, $360,000
)
364,000$
Unrealized holdin
g
g
ain on investments 4,000$
b.
A
p
r. 10 44,900
Marketable securities
(
1,000 x $40
)
40,000
Gain on Sale of Investments 4,900
Sold 1,000 shares of Limited Brands, Inc. at a price
Cash ((1,000 x $45) – $100)
PROBLEM 7.5
A
CHARTER HOLDING CO.
Stockholders’ equity:
Current assets:
above cost.
)
g.
5,250
$
4,900
$
10,150
5,250
$
Nonoperating items:
Loss on sales of investments
PROBLEM 7.5A
CHARTER HOLDING CO. (concluded)
Realized gain
Computation:
Less: realized loss
20 Minutes, Medium
Sept
1
75,000
Accounts Receivable (Party Plus)
75,000
Dec
31
2,500
Interest Revenue
2,500
Notes Receivable
75,000
Interest Revenue
3,125
June
1
80,625
Notes Receivable
75,000
Interest Receivable
2,500
Interest Revenue
3,125
June
1
80,625
Interest Receivable
2,500
PROBLEM 7.6A
a.
General Journal
EASTERN SUPPLY
Accepted a 9-month, 10% note in settlement of an
Notes Receivable
account receivable due today.
Interest Receivable
Education.