accounting-The cash account in the general ledger for Mattie Confectionary Co.

QUESTION

ASSIGNMENT #4
Chapter 9 from
Hermanson Book (“Receivables and Payables”)
& Chapter 8 (“Cash, Petty Cash, Bank Reconciliations,
Internal Control”) from the Edwards textbook

1) The cash account in the general
ledger for Mattie Confectionary Co. on March 31,2014, shows a balance of
$16,450.00. The company’s bank statement reports an ending balance of
$18,345.00 for March 31, 2014. Comparing
the bank statement, the canceled checks, and the accompanying memorandums with
the records revealed the following reconciling items:

a.

Checks
outstanding totaled $3,620.00

b.

A deposit of
$4,496.00 had been made too late to appear on the bank statement.

c.

A check for
$1,233.00 returned with the statement had been incorrectly recorded as
$233.00. The check was originally
credited to accounts payable.

d.

The bank
collected $4,541.00 on a note left for collection.

e.

Bank service
charges for March amounted to $25.00.

f.

A check for
$745.00 was returned by the bank because of insufficient funds.

Prepare a bank
reconciliation as of March 31, 2014. Also
record the necessary journal entries related to the bank reconciliation. Use the answer sheet provided.

2) Using the answer sheet provided, prepare
entries to record the following petty cash transactions:

(a)

Carter Inc. established
a petty cash fund of $350.

(b)

Carter,
Inc.’s petty cash fund now has a balance of $75.80. The
Company replenished the fund, based on the following disbursements as
indicated by a summary of the petty cash receipts: office supplies expense,
$89.50; miscellaneous administrative expense, $108.75; and miscellaneous
selling expense, $65.60.

(c)

Carter Inc. increased
the petty cash fund to $400.

3) Mesa Camping Equipment Company’s balance sheet
dated December 31, 2013 reported Accounts Receivable of $400,000 and a credit
balance in Allowance for Doubtful Accounts of $32,000. During 2014, Mesa
Camping Equipment had the following transactions: sales on account $1,500,000;
sales returns and allowances, $50,000; collections from customers, $1,250,000;
accounts written off $36,000; previously written off accounts of $6,000 were
collected.

Instructions
(a) Prepare the journal entries for the 2014
transactions.
(b) If the company uses the percentage of sales
basis to estimate bad debts expense and anticipates 3% of net sales to be
uncollectible, what is the adjusting entry at December 31, 2014?
(c) If the company uses the percentage of
receivables basis to estimate bad debts expense and determines that
uncollectible accounts are expected to be 8% of accounts receivable, what is
the adjusting entry at December 31, 2014?

4) Holly
Transport Inc. had the following
transactions related to accounts and notes receivable.

Apr. 1, 2013 Accepted
Brando Company’s 1-year, 12% note in settlement of a $25,000 account
receivable.
July 1, 2013 Loaned
$15,000 cash to Laurel Bailey on a 9-month, 10% note.
Dec.
31, 2013 Accrued interest on all
notes receivable.
Apr. 1, 2014 Received
principal plus interest on the Brando note.
Apr. 1, 2014 Laurel
Bailey dishonored its note: Holly Transport, Inc. expects it will eventually collect.

Instructions
Prepare journal
entries to record the transactions. Holly Transport Inc. prepares adjusting
entries once a year on December 31.

5) On January 2nd Perry Company borrows $12,500.00 cash on a note payable
from Manny Financial Company with terms 90 days, 12%. Perry Company and Manny
Financial Company uses a 360 day year for interest calculations. Perry Company makes adjusting entries at the
end of each calendar quarter. Prepare the journal entries for Perry Company for
(a) the initiation of the loan, (b) the recognition of interest expense for the
quarter and (c) the payment of the note on its due date.

6) The following is a summary of Taylor
Trucking Company’s payroll for the monthly pay period ending July 15
indicated the following:

Sales
salaries

$125,000

Federal
income tax withheld

32,300

Office
salaries

30,000

Medical
insurance withheld

7,370

Social
security tax withheld

10,200

Medicare tax
withheld

2,550

On the answer
sheet provided, prepare the journal entries to record (a) the payroll and (b)
the employer’s payroll tax expense for the month. The state unemployment tax rate is 3.1%, and
the federal unemployment tax rate is 0.8%.
Only $30,000 of salaries are subject to unemployment taxes.

ANSWER:

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