Assignment
Part 1
1. Crimpson Company had the following petty cash transaction during January 2016:
Jan. 1 Established a petty cash fund of $200
12 Reimbursed the fund for the following expenses:
Supplies expense $65.00
Postage expense 45.00
Miscellaneous expenses 25.00
Petty cash on hand prior to reimbursement was $68.00
28 Reimbursed the fund for the following expenses:
Supplies expense $75.00
Miscellaneous expenses 35.00
Petty cash on hand prior to reimbursement was $86.00
31 Reduced the amount of the fund to $150.00
Required: Prepare the journal entries for the above January petty cash fund transactions.
2. Lexington Heating LLC records cash receipts deposited on a daily basis. All cash disbursements are made by checks. These disbursements are also recorded on a daily basis.
The following information is provided for July 2016:
Lexington general ledger checking account balance at July 31, 2016 was $4,634.
The bank statement checking account balance was $4,884 at July 31, 2016.
Cash receipts recorded for July 2016 in Lexington's accounting records, but did not appear on the bank statement, totaled $487.
Bank memos previously not available to Lexington are included in the bank statement. These memos includes a NSF check received from a customer for $143. Also, the were bank services charges of $11 for new checks ordered. Another memo advices Lexington that $543 has been deposited in their checking account ($550 less the bank charge of $7). This represents the net proceeds of a collection the bank had made on behalf of Lexington on a $550 note receivable.
Checks written and recorded during July in Lexington's accounting, but not included in the bank statement includes the following checks:
Ck no. 1311 $ 59
Ck no. 1312 $ 91
Ck no. 1313 $120
Ck no. 1314 $ 74
Ck no. 1315 $ 35
Check 1146 was recorded in Lexington's accounting recordings at $345 and listed in the bank statement at $543. This was not a bank error.
Checks that were outstanding as of 30 June 2016 included check no. 1115 $167 and check no. 1118 $197. Check no. 1118 was paid in the bank statement and check 1115 was not.
Required: Prepare a bank reconciliation at July 31, 2016.
3. Timken Inc. made $900,000 in sales during 2016. Twenty-five percent of these were cash sales. During the year, $22,500 of accounts receivable were written off as being uncollectible. In addition, $13,500 of the accounts that were written off in 2015 were unexpectedly collected. At its' year-end December 31, 2016, Timken had $225,000 of accounts receivable. The balance in the Allowance for Doubtful Accounts general ledger account was $13,500 credit at December 31, 2015.
|
Age(days)
|
Accounts Receivable
|
|
1-30
|
$ 90,000
|
|
31-60
|
45,000
|
|
61-90
|
22,500
|
|
91-120
|
54,000
|
|
Over 120
|
13,500
|
|
Total
|
$225,000
|
Required:
1) Prepare journal entries to record the following 2016 transactions:
a. The write-off of $22,500
b. The recovery of $13,500
2) Recalculate the balance in the Allowance for Doubtful Accounts general ledger account at December 31, 2016.
3) The estimated uncollectible accounts at December 31, 2016 are calculated as follows:
|
Age (days)
|
Estimated Loss percentage
|
|
1-30
|
1.5%
|
|
31-60
|
3%
|
|
61-90
|
4%
|
|
91-120
|
9%
|
|
Over 120
|
45%
|
Required: Prepare the adjusting entry required at December 31, 2016.
4. Zinc Inc. worksheet for the preparation of its 2016 statement of cash flows included the following:
|
|
2016
|
|
|
December 31
|
January 1
|
|
Accounts receivable
|
$32,000
|
$25,000
|
|
Allowance for uncollectible accounts
|
1,100
|
880
|
|
Prepaid rent expense
|
9,020
|
13,640
|
|
Accounts payable
|
24,640
|
21,340
|
Zinc's 2016 net income is $165,000. What amount should Zinc include as net cash provided by operating activities in the statement of cash flows?
Part 2
I. Exercises
1. On January 1, 2015, Canden Company startedto make annual deposits in order to accumulate $1,000,000 by January 1, 2019. This fund will earn annual interest of9%.
Required:
What are the four annual deposits that Canden should make at the beginning of each year. Round your answers to the nearest whole dollar.
2. John wants to make a deposit on 1/1/2016 to be able to withdraw $1,000 at the beginning of each year starting 1/1/2020 for four years. The interest rate is 6 percent.
Required:
What is the amount of the deposit that John needs to make on 1/1/2016?
3. Bob Smith borrowed $100,000 on January 1, 2015. The interest rate of 10% is compounded semiannually to be repaid January 1, 2025. To repay this Bob wants to start making five equal annual deposits into fund that earns 8% annum on January 1, 2020.
Required:
What is the amount of the five annual deposits that Bob needs to make?
4. Utomis Corp. needs $100,000 in five years for their budgeted capital expenditures. How much does Utomis need to deposit today when the interest rate is 10%.
5. Timken Company issues a $1,000,000 bond at 9% for 10 years. The market interest rate is 10%.
Required:
1. What is the issue price of these bonds and the bond discount or premium?
2. Assume that Timken uses the effective interest method to amortize the bond discount or premium for the annual interest payments, what is the interest expense and the amount of cash paid on the first interest payment?
6. On November 1, 2016 Oliver Inc. converted a $20,000 accounts payable owed to Leave Corp. to a note payable with an interest rate of 10% annum due on January 31, 2017.
Required:
1. Record the November 1, 2016 transaction in the records of Oliver.
2. Record the adjusting entry needed on December 31, 2016 of Oliver.
3. Record the journal entry for the January 31, 2017 payment of Oliver.