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Exercise 6-12 Liquid assets and accounts receivable LO A1
Barga Co. reported net sales for 2016 and 2017 of $661,000 and $740,000, respectively.
Its year-end balances of accounts receivable follow: December 31, 2016, $58,000; and December 31, 2017, $90,000.
 
a. Complete the below table to calculate the days' sales uncollected at the end of each year.
(Round your "Days' Sales Uncollected" answer to 1 decimal place.)

   
Palmona Co. establishes a $270 petty cash fund on January 1.
On January 8, the fund shows $181 in cash along with receipts for the following expenditures:
 
postage, $36
transportation-in, $13
delivery expenses, $15
miscellaneous expenses, $25.
 
Palmona uses the perpetual system in accounting for merchandise inventory.
 
Prepare journal entry to establish the fund on January 1, reimburse it on January 8, and reimburse the fund and increase it to $320 on January 8,
assuming no entry in part 2. (Hint: Make two separate entries for part 3.)
 
 

Date	Account	Dr	Cr
	Petty Cash	$270
	Cash		$270
	To establish the fund

 

Date	Account	Dr	Cr
	Postage Expense	$36
	transportation-in	$13
	Delivery expenses	$15
	Miscellaneous expenses	$25
	Cash		$89
	To reimburse the fund

 

Date	Account	Dr	Cr
	Postage Expense	$36
	Transportation-in	$13
	Delivery expenses	$15
	Miscellaneous expenses	$25
	Cash		$89
	To reimburse the fund

 

Date	Account	Dr	Cr
	Petty Cash	$50
	Cash		$50
	To increase the fund ($320 - $270)

   
Exercise 6-5
Petty cash fund with a shortage LO P2
Waupaca Company establishes a $370 petty cash fund on September 9.
On September 30, the fund shows $137 in cash along with receipts for the following expenditures: transportation-in,
$43; postage expenses, $56; and miscellaneous expenses, $123.
The petty cashier could not account for a $11 shortage in the fund.
The company uses the perpetual system in accounting for merchandise inventory.
 
Prepare
(1) the September 9 entry to establish the fund,
(2) the September 30 entry to reimburse the fund, and
(3) an October 1 entry to increase the fund to $430.
 
 
 
Required information
Problem 6-4A Preparing a bank reconciliation and recording adjustments LO P3
[The following information applies to the questions displayed below.]
 
The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017.
  
On July 31, the company’s Cash account has a $25,648 debit balance, but its July bank statement shows a $27,113 cash balance.
Check No. 3031 for $1,180 and Check No. 3040 for $582 were outstanding on the June 30 bank reconciliation.
Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not.
Also, Check No. 3065 for $366 and Check No. 3069 for $1,948, both written in July, are not among the canceled checks on the July 31 statement.
 
In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July
rent expense was correctly written and drawn for $1,250 but was erroneously entered in the accounting records as $1,240.
 
The July bank statement shows the bank collected $9,500 cash on a noninterest-bearing note for Branch, deducted a $48 collection expense,
 and credited the remainder to its account. Branch had not recorded this event before receiving the statement.
 
The bank statement shows an $805 charge for a $795 NSF check plus a $10 NSF charge.
The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
The July statement shows a $14 bank service charge.
It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
Branch’s July 31 daily cash receipts of $10,652 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.
Problem 6-4A Part 1
Required:
 
1. Prepare the bank reconciliation for this company as of July 31, 2017.
 
Required information
Problem 6-4A Preparing a bank reconciliation and recording adjustments LO P3
[The following information applies to the questions displayed below.]

 
The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017.
  
On July 31, the company’s Cash account has a $25,648 debit balance, but its July bank statement shows a $27,113 cash balance.
Check No. 3031 for $1,180 and Check No. 3040 for $582 were outstanding on the June 30 bank reconciliation.
Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $366 and Check No. 3069 for $1,948,
both written in July, are not among the canceled checks on the July 31 statement.
 
In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for
July rent expense was correctly written and drawn for $1,250 but was erroneously entered in the accounting records as $1,240.
 
The July bank statement shows the bank collected $9,500 cash on a noninterest-bearing note for Branch, deducted a $48 collection expense,
and credited the remainder to its account. Branch had not recorded this event before receiving the statement.
 
The bank statement shows an $805 charge for a $795 NSF check plus a $10 NSF charge.
The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
 
The July statement shows a $14 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
Branch’s July 31 daily cash receipts of $10,652 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.
Problem 6-4A Part 2
 
Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of July 31, 2017.
 
 (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
 
Fluffy Pet Groomingdeposits all cash receipts on the day when they are received and all cash payments are made by check.
At the close of business on June 30, its Cash account shows a $14,811 debit balance.
Fluffy Pet Grooming's June 30 bank statement shows $14,472 on deposit in the bank.
 
Prepare a bank reconciliation for Fluffy Pet Grooming using the following information:

a. Outstanding checks as of June 30 total $2,261.

b. The June 30 bank statement included a $75 debit memorandum for bank services.

c. Check No. 919, listed with the canceled checks, was correctly drawn for $789 in payment of a utility bill on June 15.
    Fluffy Pet Grooming mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $798.

d. The June 30 cash receipts of $2,534 were placed in the bank's night depository after banking hours and were not
     recorded on the June 30 bank statement.

What is the adjusted bank balance?
 
$14,745
 
$14,472 - $2,261 + $2,534 = $14,745
   
Triple Company's accountant made an entry that included the following items:
 
debit postage expense $12.42
debit office supplies expense $27.33,
debit cash over/short $2.19.
 
If the original amount in petty cash is $320, how much was the credit to cash for the reimbursement?
 
$41.94
 
$12.42 + $27.33 + $2.19 = $41.94
   
A company had net sales of $31,500 and ending accounts receivable of $2,700 for the current period.
Its days' sales uncollected is equal to:
 
31.3 days
 
($2,700/$31,500) x 365 = 31.3 days
   
The following information is available to reconcile Sleepy Time Bedding's book balance of cash with its bank statement cash balance as of July 31:

a. On July 31, the company's Cash account has a $25,862 debit balance, but its July bank statement shows a $28,177 cash balance.

b. Check No. 1531 for $1,520 and Check No. 1540 for $752 were outstanding on the June 30 bank reconciliation. Check No. 1540 is
listed with the July canceled checks, but Check No. 1531 is not. Also, Check No. 1565 for $536 and Check No. 1569 for $2,288, both
written in July, are not among the canceled checks on the July 31 statement.

c. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No.
1556 for July rent was correctly written and drawn for $1,240 but was erroneously entered in the accounting records as $1,230.

d. A credit memorandum enclosed with the July bank statement indicates the bank collected $9,500 cash on a noninterest-bearing
note for Sleepy Time Bedding, deducted a $48 collection fee, and credited the remainder to its account. Sleepy Time Bedding had
not recorded this event before receiving the statement.

e. A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw.
Sleepy Time Bedding has not yet recorded this check as NSF.

f. Enclosed with the July statement is a $14 debit memorandum for bank services. It has not yet been recorded because no previous
notification had been received.

g. Sleepy Time Bedding July 31 daily cash receipts of $10,652 were placed in the bank's night depository on that date, but do not appear
on the July 31 bank statement.

What is the adjusted book balance?
 
$34,485
 
25,862 - 10 + 9500 - 48 - 805 - 14 = 34,485
   
Assume that the custodian of a $450 petty cash fund has $62.50 in coins and currency plus $382.50 in receipts at the end of the month.
The entry to replenish the petty cash fund will include:
 
A credit to Cash for $387.50
   
Given the following information:

Petty Cash Balance                                                          $450.00
Postage receipt                                                                 $48.00
Business meal receipt                                                     $102.34
Courier receipt                                                  $82.50
Office Supplies receipt                                   $56.22
Cash on hand at the end of the month    $76.21

What is the amount that needs to be reimbursed?
 
$373.79
 
$450.00 - $76.21 = $373.79
   
A company purchased $1,800 of merchandise on December 5.
On December 7, it returned $200 worth of merchandise.
On December 8, it paid the balance in full, taking a 2% discount.
The amount of the cash paid on December 8 is: $200

$1,564
$1,568
$1,600
$1,800
$1,568
 
100% - 2% = 98% or 0.98
1,800 – 200 x .98 = 1,568
   
On July 22, a company purchased merchandise inventory at a cost of $5,250 with credit terms 2/10, net 30.
If the company pays for the purchase on August 7, what would be the appropriate journal entry?
 
Accounts Payable            5,145
Cash                                                      5145
 

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