ACCT 2301 Exam 4

Description

QUESTION 1

1. RECONCILIATION AND JOURNAL ENTRIES (20 points) – Prepare a reconciliation and journalize the entries required to correct the company’s cash balance on the books using the following data that were accumulated for use in reconciling the cash on the books with the bank account of Swift Ready Mart for November 2017:

a.      Outstanding checks total $4,200.

b.      The book balance is $27,000 at November 30, 2017.

c.      The bank balance at November 30, 2017 was $32,000.

d.      The bank service charge is $50.

e.      A customer’s check for $600 was returned for nonsufficient funds.  The customer had given the Swift Ready Mart the check in payment of an account receivable.

f.       The bank collected some rent paid to Swift Ready Mart by EFT in the amount of $3,850 and deposited the cash in Swift Ready Mart’s account at the bank but Swift Ready Mart has not yet entered the amount in the books.

g.      A deposit of $2,400 is in transit.

 

 

QUESTION 2

1. ENTRIES FOR BAD DEBT EXPENSE USING DIRECT-WRITE OFF METHOD (10 points) Perry Fireworks uses the direct write-off method.  Prepare the journal entries for the following transactions.

Date	Transaction
Mar 17	Sale in the amount of $5,500 to Swish Events on account. (Ignore Cost of Goods Sold part of the transaction.  Record the Sale part only)
Jul 4	Wrote off account of Swish Events in the amount of $5,500.
Sep 3	Received $1,000 as partial payment on an account receivable for Hot and Cold Plumbing. Wrote off $2,000 which was the remaining balance because they said could not pay.
Oct 31	Received the $5,500 from Swish Events whose account had been written off on Jul 4. Reinstated the account and recorded the cash receipt.
Dec 31	Wrote off the following account as uncollectible:   California Gurls Apparel $4,000

 

QUESTION 3

1. ENTRIES FOR BAD DEBT EXPENSE USING ALLOWANCE METHOD (10 Points) Prepare the journal entries for the following transactions assume the company uses the allowance method for accounting for bad debt.  For the year ended December 31, 2017, the Lovato Licensing Corp. had the following transactions:

Date	Transaction
Jan 1	Wrote off account of Confident Corporation $10,000
Feb 14	Received $5,000 as partial payment on the $25,000 account of Cool for the Summer Air Conditioning Company. Wrote off the remaining balance as uncollectible.
April 1	Received the $10,000 from Confident Corporation whose account had been written off on Jan 1. Reinstated the account and recorded the cash receipt.
Dec 31	Wrote off the following account as uncollectible:   Unbroken Ceramics Inc. $400
Dec 31	Journalize the year end allowance entry for uncollectible accounts.  Based on history the adjustment amount will be $60,000.

 

 

QUESTION 4

1. ENTRIES FOR RECEIPT OF NOTES RECEIVABLE (10 Points) – In the space provided on your answer sheet, prepare the journal entries for the following Note Receivable transactions.  The Cyrus Wrecking Ball Rentals Company had the following transactions in 2017:

 

Date	Transaction
May 1	Loaned Cash to Malibu Construction the amount of $100,000 on a 6 month note at 4% dated May 1
Oct 31	Received from Malibu Construction, cash for the face amount of the note plus the 6 months interest.