Homework 5
Question 1 The following information regarding cash for
Alpha Company is provided for the month ending March 31, 2016:
Item
Amount
Ending Cash per Bank Statement
$1,500
Ending Cash per Company Books
$1,705
Bank Service Charges
$15
Deposits in Transit
$325
Outstanding Cheques
$230
Customer Cheque returned NSF
$95
What is the adjusted cash balance based on the completed
bank reconciliation?
Question 2 One January 2, 2016, Alpha Company purchased
10,000 shares of Bravo Company stock, as trading securities, for $10 per share.
On July 3, 2016 the securities were trading on the open market for $12.50 per
share. On December 31, 2016, the closing market price for these securities was
$9.00 per share. What value should the
trading securities be reported for Alpha Company’s FY 2016 balance sheet?
Question 3 Alpha Company sells goods to customers who use
Worldwide Express nonbank credit cards. Credit card sales on July 15, 2016
amounted to $25,000 and were subject to a 5.5% credit card company collection
fee. Alpha Company collected payment
from Worldwide Express on July 21. What
amounts should be recorded for the following accounts for the July 21
collection?
Cash
Sales
Service Charge
Accounts Receivable
Question 4 Alpha Company uses aging to estimate
uncollectibles. At the end of the fiscal
year, December 31, 2016, Accounts Receivable has a balance that consists of:
Dollar Value
Age of Account
Estimated Collectible
$100,000
< 30 days old 98% 50,000 30 to 60 days old 90% 25,000 61 to 120 days old 50% 10,000 > 120 days old
10%
The current unadjusted Allowance for Uncollectable Accounts
balance is a credit balance of $1,500 and the Bad Debt Expense accounts has an
unadjusted balance of zero. After the adjusting entry is made, what will be the
dollar balances in the:
1. Accounts Receivable
2. Allowance for Doubtful Accounts
3. Bad Debt Expense
Question 5 Alpha Company used the percentage of sales
method, with an historical rate of 2.5% for determining their bad debt expense.
During 2016, sales were $1,500,000, and the January 1 Allowance for Doubtful
Accounts had a normal balance of $25,000.
$18,600 of accounts were written off during the year. What are the year end dollar amounts for:
Charged to the Bad Debt Expense account
Balance for Allowance for Doubtful Accounts
Question 6 Alpha Company has the following account balances information
for fiscal year 2015 & 2016 (all balances are normal):
Alpha Company
December 31
Accounts
2016
2015
Accounts Receivable
$50,000
$45,000
Merchandise Inventory
57,000
50,000
Office Supplies
25,000
20,000
Credit Sales
1,000,000
740,000
Interest Income
25,000
20,000
Cost of Goods Sold
460,000
385,000
1. What is the FY 2016 accounts receivable turnover ratio?
Enter the answer as a number rounded to one decimal place followed by a space
and the word times. (Example 1.123 would be entered 1.1 times)
2. What is the FY 2016 days outstanding for accounts
receivable ratio? Enter the answer as a number rounded to one decimal place
followed by a space and the word days. (Example 1.123 would be entered 1.1
days)
Question 7 The following information regarding cash for
Alpha Company is provided for the month ending March 31, 2016:
Item
Amount
Ending Cash per Bank Statement
$1,700
Ending Cash per Company Books
$1,905
Bank Service Charges
$25
Deposits in Transit
$425
Outstanding Cheques
$350
Customer Cheque returned NSF
$105
Use this information to prepare the compound General Journal
entry (without explanation) for March 31, 2016, to cause the company books to
match the adjusted cash balance based on the completed bank reconciliation. If
no entry is required then write “No Entry Required.”
Question 8 On April 1, 2016, Alpha Company set up a petty
cash fund with a balance of $550. At the end of the month, the petty cash box
contained vouchers of $85 for postage, $175 for supplies, $50 for gasoline, and
cash on hand of $195. On April 30, 2016, the petty cash fund was replenished.
Use this information to prepare the General Journal entries (without
explanation) for April 1 and April 30 (compound entry). If no entry is required
then write “No Entry Required.”
Question 9 One August 2, 2016, Alpha Company purchased
10,000 shares of Bravo Company stock, as trading securities, for $10 per share.
On September 30, 2016 the securities were trading on the open market for $12.50
per share. On December 31, 2016, the closing market price for these securities
was $9.50 per share. Use this information to prepare the adjusting General
Journal entry (without explanation) for December 31. If no entry is required
then write “No Entry Required.”
Question 10 Alpha Company uses the direct write-off method
of recording uncollectible accounts. On August 15, 2016, Yankee Zulu filed for
bankruptcy and informed Alpha that he would be unable to pay $350 owed to
Alpha. Alpha is certain that it will be
unable to collect the $350. Use this
information to prepare the General Journal entry (without explanation) for
August 15. If no entry is required then write “No Entry Required.”
Question 11 Alpha Company uses an allowance method for
recording bad debts. On July 15, 2016 Alpha Company was advised of the
bankruptcy of the Broken Corporation and wrote off their $5,000 of accounts
receivable. Suddenly, on August 25, 2016
Broken won the Maryland State Mega Millions. Without warning, on August 26,
Alpha Company received half the payment for Broken’s past debt. Use this
information to prepare the General Journal entries (without explanation) for
the August 26, 2016 event. If no entry is required then write “No Entry
Required.”
Question 12 On April 30, 2016, Alpha Company’s note
receivable from Bravo Company was dishonored due to the extreme decline in
economic conditions. The note was a one-year, $30,000 note, issued on January
1, 2016, bearing 10%. Use this information to prepare for the Alpha Company the
General Journal entries (without explanation) for April 30, 2016. If no entry
is required then write “No Entry Required.”
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