During March, the following transactions were completed by Bob’s Inc., a new business started on March 1, 2015:
March 1 Sold 20,000 shares of $10 par value stock for $200,000 cash.
March 1 Purchased equipment for $36,000, paying $6,000 cash, charging the balance on account.
March 3 Purchased office supplies for $5,000 on account.
March 5 Paid $3,600 cash for 1-year insurance policy effective March 1. Use the account Prepaid Insurance to record this asset.
March 12 Billed customers $8,000 for professional services.
March 18 Paid $12,000 cash on amount owed on equipment and $3,000 on amount owed on office supplies.
March 20 Paid $7,000 cash for employee salaries.
March 21 Collected $4,000 cash from customers billed on March 12.
March 25 Billed customers $10,000 for professional services.
March 31 Paid $1,200 for the monthly utilities for the office.
March 31 Paid cash dividend of $.15 per share to shareholders
Additional Information - Adjustments:
• Unbilled and uncollected revenue for services performed as of March 31 is $12,000.
• Depreciation on equipment for the month was $600.
• An inventory count shows $1,000 of office supplies on hand at March 31.
• Accrued but unpaid employee salaries were $4,000 (the salaries have not yet been recorded).
Required: Using the Worksheet Provided: (tabs identified by a, b, c, d)
a. Prepare Journal Entries for transactions for March. No descriptions are required
a. Prepare Journal Entries for any adjustments. No descriptions are required
b. Complete the Worksheet provided
c. Prepare an Income Statement, Statement of Owner’s Equity, and Balance Sheet for March 31, 2015
d. Prepare the appropriate closing entries for March 2015
d. Prepare a post-closing Trial Balance for March 2015
On August 1, 2011, Docknal Construction received a 9 percent, six-month note receivable from Quick-Build, one of Docknal's problem credit customers. Quick-Build had owed $36,000 on an outstanding account receivable. The note receivable was taken in settlement of this amount. Assume Docknal makes adjusting entries for accrued interest revenue once each year on December 31.
Journalize the following events on the books of Docknal Construction:
1 Record the receipt of the note on August 1 in settlement of the account receivable.
2 Record accrued interest at December 31, 2011
3 Assume that Quick-Build pays the note plus accrued interest in full. Record the collection of the principal and interest on January 31, 2012
4 Assume that Quick-Build did not make the necessary principal and interest payment on January 31, 2012. Rather, assume that he defaulted on his obligation. Record the default on January 31, 2012
William Fleck, a trusted employee of Jones Manufacturing, found himself in a personal financial difficulties and decisded to 'borrow' $3,000 from the company and to conceal his theft
As a first step, Fleck removed $3,000 in currency from the cash register. This amount represented the bulk of the cash received in over-the-counter sales during the three business days since the last bank deposit. Fletcher then removed a $3,000 check from the day's incoming mail; this check had been mailed in by a customer. ***** *****, in full payment of his account. Fleck makde no journal entry to record the $3,000 collection from Adams, but deposited the check in Jones Manuracturing's bank account in place of the $3,000 over-the-counter cash receipts he had stolen.
In order to keep Adams from protesting when his month-end statement reached him, Fleck made a journal entry debiting Sales Returns and Allowances and crediting Accounts Receivable - ***** *****. Fleck prosted this entry to two general ledger accounts affected and to Adam's account in the subsidiary ledger for accounts receivable
A. Did these action by Fleck cause the general ledger to be out of balance or the subsidiary ledger to disagree with the control account? Explain.
B. Assume that Jones Manufacturing prepares financial statements at the end of the month without discovering the theft. Would any items in the balance sheet or the income statement be in error? Explain.
C. Several weaknesses in internal control apparently exist in Jones Manufacturing. Indicate three specific changes needed to strenghen internal control over cash receipts.
The credit manager of Monique Food has gathered the following information about the company's accounts receivable and credit losses during the current year:
Net credit sales for the year $ 8,000,000
Accounts receivable at year-end $ 1,750,000
Uncollectible accounts receivable:
Actually written off during the year $ 96,000
Estimated portion of year-end receivables expected to prove uncollectible (per aging schedule) $ 84,000
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