30 Minutes Medium
Var.* 230,000
Accounts Receivable 230,000
Var.* 18,000
Allowance for Doubtful Accounts 18,000
Accounts Receivable
Entry summarizing the reinstatement of accounts
proving to be collectible.
PROBLEM 7.4B
a.
General Journal
REDSTONE MILL
throughout the year.
Allowance for Doubtful Accounts
Entry summarizing the write-off of receivables
2015
a. Marketable securities
(
cost
,
$75
,
000
)
90
,
000$
Unrealized holdin
g
g
ain on investments 15
,
000$
b.
A
p
ril 6 5
,
480
,
,
,
,
020
Marketable Securities 22
,
500
c.
Balance at Dec. 31
,
2014 90
,
000$
,
,
,
,
,
Current
d. Cost Market Value
share
;
market value
,
$40
)
27
,
000$ 36
,
000$
,
,
,
,
,
,
f. Marketable securities
,
(
$64,500 – $53,500 = $11,000
)
.
Current assets:
Sold 2,500 shares of Dr
y
Foods at a
p
rice below
cost.
Loss on Sale of Investments
Securities account to current market value
Dr
y
Foods
(
2,500 shares; cost, $9
p
er share; market
Lamb Com
p
uter, Inc.
(
900 shares; cost $30
p
er
Marketable Securities account:
Current assets:
Stockholders’ e
q
uit
y
:
Cash
g.
2,540
$
2,480
$
5,020
(2,540)
$
PROBLEM 7.5B
WESTPORT MANUFACTURING CO. (concluded)
Nonoperating items:
Loss on sale of investments
Computation:
20 Minutes, Medium
Nov
1
30,000
Accounts Receivable (Sampson Co.)
30,000
Dec
31
600
Interest Revenue
600
Aug.
1
32,700
Notes Receivable
30,000
Interest Receivable
600
Interest Revenue
2,100
b.
Aug.
1
32,700
Notes Receivable
30,000
Interest Receivable
600
Interest Revenue
2,100
c.
Assuming that note was defaulted.
To reclassify as an account receivable the
defaulted note.
There are two reasons why the company adopts this policy: (1) The interest earned on the
PROBLEM 7.6B
a.
General Journal
MIDTOWN DISTRIBUTION
account receivable due today.
Notes Receivable
Accepted a 9-month, 12% note in settlement of an
To accrue interest for two months (November
Collected 9-month, 12% note from Sampson Co.
was earned in current year).
through December) on Sampson Co. note ($30,000 x
2/12 x 12% = $600).
($30,000 x 9/12 x 12% = $2,700, of which $2,100
20 Minutes, Medium
a.
b.
c.
d.
e.
Bank Reconciliation
PROBLEM 7.7B
General Journal
DATA MANAGEMENT, INC
.
In the prior period the company had established what it thought to be a reasonable credit
balance in the Allowance for Doubtful Accounts. Throughout the current period, as
Accounts Receivable at Net Realizable Value
Notes and Interest Receivable
To record accrued interest revenue on notes
receivable
(
$72,000 x 6% x 1/12
)
.
To re
p
ort accounts receivable at their net
realizable value. $40,000 allowance re
q
uired
(
$900,000 – $860,000
)
. $9,000 debit balance
p
rior
to the ad
j
ustment. $49,000 ad
j
ustment re
q
uired
(
$40,000 – $9,000
)
.
To record bank service char
g
es, reclassif
y
NSF
Marketable Securities
check as an account receivable, and correct
an error in the recordin
g
of office su
pp
lies.
current market value
(
$75,000 – $68,000
)
.
40 Minutes, Strong
a.
General
Bank Statement
Ledger Balance
Balance
112,000
$
104,100
$
16,800
(12,400)
(100)
(2,500)
(900)
108,500
$
108,500
$
100
2,500
900
Cash
3,500
b.
Money market accounts
150,000
$
High-grade, 60-day, commercial paper
5,000
Total cash equivalents
155,000
$
Total cash (from part a)
108,500
Cash and cash equivalents at 12/31/15
263,500
$
c.
135
Interest Revenue
135
PROBLEM 7.8B
CIAVARELLA CORPORATION
Preadjustment balances, 12/31/15
Deposits in Transit
To record interest revenue on the Ritter Industries
note receivable ($18,000 x 9% x1/12).
Accounts Receivable (Needham Company)
Computer Equipment
Error correction check #550
The necessary entry to update the general
ledger is as follows:
bank reconciliation.
To update the general ledger following the
d.
540,000
$
(14,000)
(5,252,500)
6,480,000
12,000
$
(14,000)
64,800
62,800
1,693,200
$
e.
2,500
1,756,000
$
263,500
$
245,000
18,000
135
1,693,200
2,219,835
$
PROBLEM 7.8B
Accounts receivable written off during 2015
CIAVARELLA CORPORATION
Accounts receivable balance January 1, 2015
(continued)
Collections on account during 2015
Credit sales made during 20115