Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 4, Problem 4.2ME
Mini-Exercise 4.2
LO 2, 6, 7
Record transactions and adjustments The transactions and adjustments related to the second month of operations of Zoe Amelia Corp, were as follows:
- Paid wages that had been accrued at the end of the prior month.
- Collected accounts receivable from sales recorded in the prior month.
- Paid accounts payable owed for purchases made in the prior month.
- Borrowed cash from a local bank on a short-term promissory note.
- Purchased merchandise inventory for cash.
- Incurred and paid utilities expense for the month.
- At the end of the month, accrued interest on the short-term promissory’ note recorded in transaction d.
- Recognized rent expense for one month of the three-month payment of rent in advance made in the prior month (as a reclassification
adjusting entry ).
Required:
Enter the following column headings across the top of a sheet of paper:
Transaction/Adjustment A = L + SE Net Income
Enter the transaction/adjustment in the first column, and show the effect, if any, of the transaction entry’ or adjusting entry’ on the appropriate balance sheet category’ or on net income by indicating the account name(s) affected and whether each is an addition (+) or subtraction (-). Items that affect net income should not be shown as affecting
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Brief Exercise 7-06
The cash register tape for Larkspur Industries reported sales of $10,169.80.Record the journal entry that would be necessary for each of the following situations. (a) Sales per cash register tape exceeds cash on hand by $75.11. (b) Cash on hand exceeds cash reported by cash register tape by $41.90. (Round answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Transactions
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Debit
Credit
(a)
enter an account title
enter a debit amount rounded to 2 decimal places
enter a credit amount rounded to 2 decimal places
enter an account title
enter a debit amount rounded to 2 decimal places
enter a credit amount rounded to 2 decimal places
enter an account title
enter a debit amount rounded to 2 decimal places
enter a credit amount rounded to 2 decimal places
(b)
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Brief Exercise 7-04
Presented below is information related to Sunland Company for its first month of operations.
Credit Sales
Cash Collections
Jan. 7
Austin Co.
$11,600
Jan. 17
Austin Co.
$7,500
15
Diaz Co.
7,200
24
Diaz Co.
4,500
23
Noble Co.
10,000
29
Noble Co.
10,000
Identify the balances that appear in the accounts receivable subsidiary ledger and the accounts receivable balance that appears in the general ledger at the end of January.
Subsidary Ledger
General Ledger
Austin Co.
Diaz Co.
Noble Co.
Balance of Accounts Receivable
$
$
$
$
Task 2:
Evaluate the company's efficiency in collecting its accounts receivable during the fiscal year ended 31
December 2021. Use the company's information from its annual reports:
Receivables as of 31 December 2020
Receivables as of 31 December 2021
$4,468,392
$4,972,722
$45,349,943
Sales revenue for year ended 31 December 2021
1. Calculate the company's number of days of sales outstanding (DSO) for the fiscal year ended 31
December 2021. (Use the average receivables to calculate the ratio).
Net
= 2.37
=
Accounting receivable:
Average
Day's sales in receivable = 154.
2. Interpret the calculated ratio.
3. Assume that the industry average DSO ratio is 60 days. Based on this information and the subject
company's DSO ratio, critically evaluate the company's credit policy and its implications.
Chapter 4 Solutions
Accounting: What the Numbers Mean
Ch. 4 - Prob. 4.1MECh. 4 - Mini-Exercise 4.2 LO 2, 6, 7 Record transactions...Ch. 4 - Prob. 4.3MECh. 4 - Prob. 4.4MECh. 4 - Exercise 4.5 LO 2. 6, 7 Record transactions and...Ch. 4 - Exercise 4.6 LO 2. 6, 7 Record transactions and...Ch. 4 - Exercise 4.7 LO 6 Write journal entries Write the...Ch. 4 - Exercise 4.8 LQ 6 Write journal entries Write the...Ch. 4 - Exercise 4.9 LO 2, 6, 7 Record transactions and...Ch. 4 - Exercise 4.10 LO 2. 6, 7 Record transactions and...
Ch. 4 - Exercise 4.11 LO 2. 6, 7 Record transactions and...Ch. 4 - Exercise 4.12 LO 2, 6, 7 Record transactions and...Ch. 4 - Exercise 4.13 LO 3 Calculate retained earnings On...Ch. 4 - Prob. 4.14ECh. 4 - Exercise 4.15 LO 6 . 7 Notes receivable-interest...Ch. 4 - Exercise 4.16 LO 6, 7 Notes payable-interest...Ch. 4 - Exercise 4.17 LO 6, 7 Effect of adjustments on net...Ch. 4 - Exercise 4.18 LO 6, 7 Effects of adjustments A...Ch. 4 - Exercise 4.19 LO 6 , 7 T-account analysis Answer...Ch. 4 - Exercise 4.20 LO 6, 7 Transaction analysis using...Ch. 4 - Problem 4.21 LO 2, 6, 7 Record transactions and...Ch. 4 - Prob. 4.22PCh. 4 - Prob. 4.23PCh. 4 - Problem 4.24 LO 6. 7 Calculate income from...Ch. 4 - Prob. 4.25PCh. 4 - Prob. 4.26PCh. 4 - Problem 4.27 LO 6. 7 Analyze several accounts...Ch. 4 - Prob. 4.28PCh. 4 - Case 4.29LO 6, 7Capstone analytical review of...Ch. 4 - Prob. 4.30C
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