Vikram Bhai Exercise 2-19 (Algo) Cash versus accrual accounting [LO2-9]Haskins and Jones, Attorneys-at-Law, maintains its books on a cash basis. During 2024, the law firm collected $555,000 for servicesrendered to its clients and paid out $414,000 in expenses. You are able to determine the following information about accountsreceivable, prepaid expenses, deferred service revenue, and accrued liabilities:Accounts receivablePrepaid insurancePrepaid rentDeferred service revenueAccrued liabilities(for various expenses)January 1,2024$ 64,000December 31,2024$ 58,0004,7005,8009,4007,9009,40011,00012,40015,500In addition, 2024 depreciation expense on office equipment is $23,000.Required:Determine accrual basis net income for 2024.Cash basis incomeAdd:Increase in accounts receivableDorrance in accounts receivable$141,000

Accrual accounting recognizes revenues when they are earned and expenses when they are incurred,…

Answered: Exercise 2-19 (Algo) Cash versus…

Principles of Accounting Volume 1

19th Edition

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Chapter4: The Adjustment Process

Section: Chapter Questions

Problem 2PB: To demonstrate the difference between cash account activity and accrual basis profits (net income),...

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PROBLEM: Tagaytay Company's summary of cash records show the following for the year 2022, its first year of operation: CASH Transactions Debit Credit Cash receipts 1,280,000 Cash Disbursements 825.000 December 31 balances 455.000 You are contacted by the management to compute its net income using the accrual basis of accounting. During the process of preparation, the following were identified by you that will impact your computation: 1. Property, plant and equipment are depreciated on a straight line basis. Annual depreciation is P 105,000. 2. Prepaid insurance of P 18,000 was recognized as expense when it was paid. P 12,000 of the balance relates to year 2023. 3. The entire amount of P 120,000 which was received as advance rental for office space in its building was recognized as rent income when received. P 70,000 of the amount will be earned in 2023. 4. Employees are due P 28,000 at the end of 2022. 5. Uncollected interest from investment at the end of 2022 is P 31.700. 6. It is…
Sagada Company's summary of cash records show the following for the year 2022, its first year of operation: CASH: Cash receipts - debit, P 3,840,000 Cash disbursements - credit, P 2,475,000 December 31 balance, P 1,365,000 You are contacted by the management to compute its net income using the accrual basis of accounting. During the process of preparation, the following were identified by you that will impact your computation: Property, plant and equipment are depreciated on a straight line basis. Annual depreciation is P 630,000. Prepaid insurance of P 108,000 was recognized as expense when it was paid. One-thirds of the balance is for year 2023. The entire amount of P 1,080,000 which was received as advance rental for office space in its building was recognized as rent income when received. Twenty five percent of the amount will be earned in 2023. Employees are due P 162,000 at the end of 2022. Uncollected interest from investment at the end of 2022 is P 190,200. It is estimated that…
Joseph Co. reported the following financial information for 2020: Accounts receivable, January 1, 2020 P1,200 Accounts Receivable, December 31, 2020 250 Cash collection from customer on account 1,300 Joseph Co.’s service revenue rendered on account to clients amounted to
Problem 1.5: Anne Corporation accounts for its sales under the cash basis. Anne Corporation cash receipts books amounted to P 1,400,000. Total collections from customers, including cash sales made and recoveries of previously written-off accounts. Based on Audit investigation, they revealed that the additional information are the following: Accounts receivable, January 1, 2021 Accounts receivable, December 31, 2021 Notes receivable, trade outstanding, January 1, 2021 Notes receivable, trade outstanding, December 31, 2021 Sales discount taken by customers Sales returns before collections were made (Evidenced by issued credit memos) Sales returns after collections were made, thus refunds were given Write-off worthless accounts receivable Cash recoveries from accounts previously write-off 100,000 140,000 80,000 90,000 40,000 25,000 5,000 30,000 10,000 Requirements: Compute for the following under the accrual basis of accounting: a. Gross sales for the year b. Net sales for the year c.…
Question 28 On July 31, 2028, Massive Ltd. had a cash balance of $6,793 in its general ledger. The bank statement from the Bank of Auditing on that date showed a balance of $6,578. A comparison of the bank statement with the Cash account revealed the following: a. Cash receipts for July 31 recorded on the company's books were $3,500, but this amount does not appear on the bank statement. b. A cheque of $5,100 made by another company was incorrectly deducted to Massive's account by the Bank of Auditing. c. The bank statement included service charges and debit and credit card processing fees of $65. d. Cheques outstanding on June 30 totaled $6,200. Of these, $4,600 worth cleared the bank in July. All cheques written in July cleared the bank in July. e. The bank statement included electronic collections from customers on account totaling $8,800. Massive had not recorded the EFT. f. Salaries of $4,800 were paid electronically during the month. The company has already recorded these. g. An…
Accounting A Corp. required additional cash for its operation and used its accounts receivable to raise such needed cash, as follows: On December 1, 2021, A Corp. assigned on a non-notification basis accounts receivable of P10,000,000 to a bank in consideration for a loan of 60% of the receivables less a 1% service fee on the accounts assigned. A signed a note for the bank loan. On December 31, 2021, A collected assigned accounts of P5,000,000 less discount of P100,000. A remitted the collections to the bank in partial payment for the loan. The bank applied first the collection to the interest and the balance to the principal. The agreed interest is 2% per month on the loan balance. A received an advance of P400,000 from Job Financial Co. by pledging P500,000 of accounts receivable. The loan is due in five years. On December 31, 2021, A discounted at a bank a customer's P3,000,000, 1 year, 10% note receivable dated April 30, 2021. The bank discounted the note at 15% on the same date.…
Novak Enterprises owns the following assets at December 31, 2025. Cash in bank-savings account $67,800 Cash on hand Cash refund due from IRS 8,710 Cash to be reported $ 33,800 What amount should be reported as cash? Checking account balance Postdated checks Certificates of deposit (180-day) $22,500 850 94,980
31 REQUIRED: 1. At what amount should cash as a current asset appear in the balance sheet? 2. How will the other accounts be reported? Exercise 1-4 An analysis of the Cash account of the HYACINTH COMPANY revealed the following details as of Dec. 31, 2019: 1. Petty cash fund (cleared of non-fund items) 2. Change fund 3. Undeposited collections 4. Cash in bank- BDO 5. Cash in bank-BDO 6. Cash in bank-sinking fund 7. Cash deposited with a closed bank 8. Demand deposits with Bank of America 9. Time deposit (60 days) with China Bank 10. Cash in bank- for building construction P4,700 2,000 8,000 20,000 (4,000) 40,000 12,000 80,000 120,000 240,000 REQUIRED: 1. At what amount should cash as a current asset appear in the balance sheet? 2. How will the other accounts be reported? Exercise 1-5 The cash account of the EVERGREEN COMPANY showed a credit balance of P20,000 after checks totaling P45,000 have been prepared in payment of outstanding liabilities with suppliers and credited to cash in…
Problem 3. The books of Marikit’s Service, Inc. disclosed a cash balance of P687,570 on December31, 2020. The bank statement as of December 31 showed a balance of P547,800. Additionalinformation that might be useful in reconciling the two balances follows:a. Check number 748 for P30,000 was originally recorded on the books as P45,000.b. A customer’s note dated September 25 was discounted on October 12. The note wasdishonored on December 29 (maturity date). The bank charged Marikit’s account forP142,650, including a protest fee of P2,650.c. The deposit of December 24 was recorded on the books as P28,950, but it was actually adeposit of P27,000.d. Outstanding check totaled P98,850 as of December 31.e. There were bank service charges for December of P2,100 not yet recorded on the books.f. Marikit’s account had been charged on December 26 for a customer’s NSF for check forP12,960g. Marikit properly deposited P6,000 on December 3 that was not recorded by the bank.h. Receipts of December 31…
16 AA Corporation shows a cash balance of P1,570,000 as of December 31, 2022. The following cash transactions were included in this cash balance: A check from a customer for P111,000 was received on December 28, 2022 as payment of accounts due to AA . The check is dated January 3, 2023. A check dated September 15, 2022 was held by the cashier amounting to P230,000. The check was not deposited in the bank as of December 31, 2022 because it was misplaced by the cashier. A customers check for P180,000 was deposited on December 28 but returned by bank on December 30 marked NSF. A check drawn by AA as payment of accounts due to supplier amounting to P325,000. The was still held by the custodian as of December 31, 2022 and was released to supplier on January 4, 2023. What is the correct cash balance as of December 31, 2022?
Required information [The following information applies to the questions displayed below.] The cash records and bank statement for the month of July for Glover Incorporated are shown below. GLOVER INCORPORATED Cash Account Records July 1, 2021, to July 31, 2021 Cash Balance Cash Balance July 1, 2021 + Cash Receipts − Cash Disbursements = July 31, 2021 $7,390 $8,630 $10,140 $5,880 Cash Receipts Cash Disbursements Date Desc. Amount Date Check# Desc. Amount 7/9 Sales $ 2,630 7/7 531 Rent $ 1,570 7/21 Sales 3,210 7/12 532 Salaries 2,030 7/31 Sales 2,790 7/19 533 Equipment 4,200 7/22 534 Utilities 970 7/30 535 Advertising 1,370 $ 8,630 $ 10,140 P.O. Box 123878 FIDELITY UNION Member FDIC Gotebo,…
Present the Reconciliation per Company’s Book The accounting records of BEE Company show the summary data of its cashreceipts and payments for November 2019. Its November Cash Balance hasP42,130.00; its Total Cash Receipts is P40,000.00, Total Checks issued isP25,000.00. The company received its Bank Statement indicating a balance ofP82,000.00. The following reconciling items were discovered.Item No. 1 – A deposit of cash receipts P3,000.00 of November 30 is too late toinclude in the bank statement.Item No. 2 – Outstanding checks were: No. 1234-P2,652.00; No. 1235-P6,557.00;No. 1236-P6,095.00.Item No. 3 – The bank collected a note left for collection amounting to P20,000.00plus a service charge of P600.00. Item No. 4-Check No. 1237-P P690.00 was incorrectly charged by the bank asP960.00Item No. 5-Check No. 1238-P cleared by the bank with P4,200.00 has been recordedin the company’s book as P2,400.00. This was for the payment of the creditor’saccount.Item No. 6-The customer returned…

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