Concept explainers
Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.
Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
- Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
To Journalize: The given transaction of Company HH, to determine the net effect of selling and collection activities.
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LooseLeaf Intermediate Accounting w/ Annual Report; Connect Access Card
- Exercise 10-05 In performing accounting services for small businesses, you encounter the following situations pertaining to cash sales. 1. Ivanhoe Company enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $29,500 and sales taxes $1,475. 2. Pharoah Company does not segregate sales and sales taxes. Its register total for April 15 is $21,730, which includes a 6% sales tax. Prepare the entry to record the sales transactions and related taxes for Ivanhoe Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Apr. 10 enter an account title to record the sales transactions and related taxes for Ivanhoe Company on April 10 enter a debit amount enter a credit amount enter an account title to record the sales transactions and related taxes…arrow_forwardD Question 6 An entity reported the following data on December 31,2019: Cash in bank, net of bank overdraft of 100,000 1200,000 PCF, including unreplenished expenses of 10,000 50,000 Notes receivables 750,000 A/R net customers account with credit balances of 200K 2,000,000 Inventory, excluding unrecorded purchase of 300,000 on account in transit shipped FOB SP on 12/31/19 2500,000arrow_forwardProblem 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.…arrow_forward
- 11.18 Outstanding deposits and unpresented cheques * LO3 The following information has been extracted from the cash records of Wheeler Ltd and shows four independent situations. Assume there were no direct bank debits or credits on the bank statement and that all outstanding deposits and unpresented cheques in one month appeared on the bank statement in the following month. 1. The total of outstanding deposits on the 30 April bank reconiliation statement was $1875. During May, the company made deposits of $40 200 to its bank account but the bank statement showed that only $39 840 was deposited during the month. 2. The total of unpresented cheques on the 30 April bank reconciliation statement was $1440. During May, the total of cheques issued was $29 175 but the bank statement showed that only $27 720 in cheques were presented during the month. 3. During July, deposits recorded on the bank statement totalled $46 200, but deposits according to the company's records were $43 950 and…arrow_forwardQuestion 12 The following data pertain to Gliezel company on December 31, 20B: Trade accounts payable, including cost of goods received on consignment of P180,000 is 1,620,000; Accrued taxes payable, 150,000; Customers' deposit, 120,000; Cherry company as guarantor, 240,000; Bank overdraft, 66,000; Accrued electric and power bills, 72,000; Reserve for contingencies, 180,000. How much should be shown as total current liabilities? CHOICES 2,208,000 2,088,000 1,980,000 1,848,000arrow_forwardMC42 The cashier misplaced all the bank statements for the past year. You reviewed the accounting records and discovered that the following journal entry was made to reconcile the June 30, 2020 bank records and accounting records: Accounts Receivables — P152,024 Miscellaneous Expense — P1,250 Notes Receivables — P20,000 Interest Revenue — P1,000 Cash — P132,274 Pre-adjustment cash balance in the accounting records was P768,370, outstanding checks were P20,750 and no other adjustments were required. What is the bank statement balance at June 30, 2020? (with solution) a. P615,346 b. P636,096 c. P656,846 d. P768,370arrow_forward
- 44 The financial statements of Kureno Company included the following information: January 1, 2020 December 31, 2020 Accounts Receivable 1,200,000 Allowance for doubtful accounts 60,000 Sales 8,000,000 Cash collected from customers 7,000,000 The cash collections included a recovery of P10,000 from a customer whose account had been written off as worthless in 2019. During 2020, it was necessary to recognize doubtful accounts expense of P100,000 and write off worthless customers’ accounts of P30,000. On December 1, 2020, a customer settled an accounts of P30,000. On December 1, 2020, a customer settled an account…arrow_forwardView Policies Current Attempt in Progress The following information relates to Sunland Limited's Cash account. The reconciled cash balance from June's bank reconciliation is $25,100. During the month of July, Sunland recorded cash receipts of $28,260 and cash payments of $15,670 in the general ledger Cash account. At July 31, Sunland Limited had an reconciled cash balance of $37,690. An examination of the company's July bank statement shows a balance of $19,547 on July 31; outstanding cheques $3,917; deposits in transit $1,737; EFT collections on account that were not yet recorded on the books $2,189; NSF cheque $1,251; NSF fee $69; and bank service charges $109. Prepare the necessary journal entries required on July 31 for Sunland. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account…arrow_forward12-36 2 and sales. . The chart below represents a year-to-date trend analysis of cash receipts $3,000,000.00 $2.500,000.00 $2000,000.00 $1,500,000.00 $1,000,000.00 $500,000.00 Cash Receipt $0.00 - Sales Apri May March August What does this chart tell you about potential risks of misstatement in accounts receivable? July September Explain which assertions are at risk and the potential over/understatement in accounts receiv- REQUIRED October November December able balance. Sum of Absolute amount June aunfarrow_forward
- QUESTION 2 Al-Yahya Enterprise has established a petty cash fund for its small expenditures. The following transactions took place during the month of February 2021: Feb 1 Established a RM200 petty cash fund with cash withdrawn from the company’s account. 20 The petty cash fund has RM15 remaining and is replenished. Expenditures during the month were RM60 for freight-in, RM35 (meals), RM20 (postage), RM65 (amenities), and RM10 (parking) REQUIRED: Prepare the journal entries for the above transactions.arrow_forward8:17 1 customer in payment of the customer's account of \ $2.700. What is the up-to-date ending Cash balance? 4. a bank reconciliation included a deposit in transit of $720, the company's journal entry for this reconciling item would include 5. Urban Bloom, Incorporated's books show an ending cash balance of $13,500 before preparing the bank reconciliationGiven the bank reconciliation shows outstanding checks of \$3700 deposits in transit of \$2,700, NSF check of $ 170, and interest earned on the bank account of $80, the company's up-to-date ending cash balance equals: 6. Egrane, Incorporated's monthly bank statement showed the ending balance of cash of $19,200. The bank reconciliation for the period showed an adjustment for a deposit in transit of $1,850, outstanding checks of $2,700, an NSF check of $1,400, bank service charges of $65 and the EFT from a customer in payment of the customer's account of $2,200. What was the cash balance on the Egrane's books (before the adjustments for…arrow_forwardPage 328 EXERCISE 7.9 Industry Characteristics and Collection Performance e LO7-8 The following information was taken from annual reports of Goodyear Tire & Rubber and PPL Corp.., a public utility: Goodyear PPL Net sales $18.1 billion $ 11.5 billion Average accounts receivable 2.3 billion 923 million a. Compute for each company the accounts receivable turnover rate for the year. b. Compute for each company the average number of days required to collect outstanding receivables (round answers to nearest whole day). c. Explain why the figures computed for Goodyear in parts a and b are so different from those computed for PPL.arrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub