EXERCISES FOR CHAP.41. The current assets and current liabilities sections of the balance sheet ofAllessandro Scarlatti Company appear as follows.ALLESSANDRO SCARLATTI COMPANYBALANCE SHEET (PARTIAL)DECEMBER 31, 2017Cash$40,000Accounts payable $61,000Notes payableAccounts receivable$89,00067.000$128.000Less: Allowance for7,000 $2,000Inventories171,000Prepaid expenses9.000$300.000The following errors in the corporation's accounting have been discovered:1. January 2018 cash disbursements entered as of December 2017 included paymentsof accounts payable in the amount of $39,000, on which a cash discount of 2% wastaken.2. The inventory included $27,000 of merchandise that had been received atDecember 31 but for which no purchase invoices had been received or entered. Ofthis amount, $12,000 had been received on consignment; the remainder waspurchased f.o.b. destination, terms 2/10, n/30.3. Sales for the first four days in January 2018 in the amount of $30,000 were enteredin the sales book as of December 31, 2017. Of these, $21,500 were sales on accountand the remainder were cash sales.4. Cash, not including cash sales, collected in January 2008 and entered as ofDecember 31, 2017, totaled $35,324. Of this amount, $23,324 was received onaccount after cash discounts of 2% had been deducted; the remainder represented theproceeds of a bank loan.Instructions(a) Restate the current assets and current liabilities sections of the balance sheet inaccordance with good accounting practice. (Assume that both accounts receivable andaccounts payable are recorded gross.)(b) State the net effect of your adjustments on Allesandro Scarlatti Company'sretained earnings balance.doubtful accounts

Errors are the mistakes which occur in the financial statements which render the statements not…

Answered: DECEMBER 3 82,000 171,000

Business

Accounting

DECEMBER 3 82,000 171,000

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter7: Receivables And Investments

Section: Chapter Questions

Problem 7.1DC: Reading 3M Companys Balance Sheet: Accounts Receivable The following current asset appears on the...

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