The current assets and current liabilities sections of the balance sheet of Sunland Co. appear as follows. Sunland Co. Balance Sheet (Partial) As of December 31, 2017 Cash $ 17,900 Accounts payable $ 29,500 Accounts receivable $ 39,600 Notes payable 15,400 Less: Allowance for doubtful accounts 3,200 36,400 Unearned revenue 3,800 Inventory 61,100 Total current liabilities $ 48,700 Prepaid expenses 7,400 Total current assets $ 122,800 The following errors in the corporation’s accounting have been discovered: 1. Keane collected $ 5,200 on December 20, 2017 as a down payment for services to be performed in January, 2018. The company’s controller recorded the amount as revenue. 2. The inventory amount reported included $ 2,300 of merchandise that had been received on December 31, 2017 but for which no purchase invoices had been received or entered. Of this amount, $ 1,600 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30. 3. Sales for the first day in January 2018 in the amount of $ 11,100 were entered in the sales journal as of December 31, 2017. Of these, $ 7,000 were sales on account and the remainder were cash sales. 4. Cash, collected in December 2017, but entered as received in January 2018 totaled $ 2,400. Of this amount, $ 2,254 was received on account after cash discounts of 2% had been deducted; the remainder was collected for cash sales. 5. Cash of $ 4,000 received in January 2018 was entered as received in December 2017. This cash represented the proceeds of a bank loan that matures in July 2018. 6. January 2018 cash disbursements entered as of December 2017 included payments of accounts payable in the amount of $ 7,000, on which a cash discount of 1% was taken.

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 13GI

Related questions

Question

The current assets and current liabilities sections of the balance sheet of Sunland Co. appear as follows.

Sunland Co. Balance Sheet (Partial) As of December 31, 2017
Cash		$ 17,900	Accounts payable	$ 29,500
Accounts receivable	$ 39,600		Notes payable	15,400
Less: Allowance for doubtful accounts	3,200	36,400	Unearned revenue	3,800
Inventory		61,100	Total current liabilities	$ 48,700
Prepaid expenses		7,400
Total current assets		$ 122,800

The following errors in the corporation’s accounting have been discovered:

1.		Keane collected $ 5,200 on December 20, 2017 as a down payment for services to be performed in January, 2018. The company’s controller recorded the amount as revenue.
2.		The inventory amount reported included $ 2,300 of merchandise that had been received on December 31, 2017 but for which no purchase invoices had been received or entered. Of this amount, $ 1,600 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30.
3.		Sales for the first day in January 2018 in the amount of $ 11,100 were entered in the sales journal as of December 31, 2017. Of these, $ 7,000 were sales on account and the remainder were cash sales.
4.		Cash, collected in December 2017, but entered as received in January 2018 totaled $ 2,400. Of this amount, $ 2,254 was received on account after cash discounts of 2% had been deducted; the remainder was collected for cash sales.
5.		Cash of $ 4,000 received in January 2018 was entered as received in December 2017. This cash represented the proceeds of a bank loan that matures in July 2018.
6.		January 2018 cash disbursements entered as of December 2017 included payments of accounts payable in the amount of $ 7,000, on which a cash discount of 1% was taken.