Bundle: Accounting, Chapters 1-13, 26th + Working Papers, Chapters 1-17 For Warren/reeve/duchac's Accounting, 26th And Financial Accounting, 14th + ... For Warren/reeve/duchac's Accounting, 26th
26th Edition
ISBN: 9781337498159
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 4, Problem 4.3CP
Financial statements
Assume that you recently accepted a position with Five Star National Bank & Trust as an assistant loan officer. As one of your first duties, you have been assigned the responsibility of evaluating a loan request for $300,000 from West Gate Auto Co., a small proprietorship. In support of the loan application, Joan Whalen, owner, submitted a “Statement of Accounts” (
1. Explain to Joan Whalen why a set of financial statements (income statement, statement of owner’s equity, and
2. In discussing the “Statement of Accounts” with Joan Whalen, you discovered that the accounts had not been adjusted at October 31. Analyze the “Statement of Accounts” and indicate possible
3. Assuming that an accurate set of financial statements will be submitted by Joan Whalen in a few days, what other considerations or information would you require before making a decision on the loan request?
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Assume that you recently accepted a position with Five Star National Bank & Trust as an
assistant loan officer. As one of your first duties, you have been assigned the responsibility
of evaluating a loan request for $300,000 from West Gate Auto Co., a small proprietor-
ship. In support of the loan application, Joan Whalen, owner, submitted a "Statement of
Accounts" (trial balance) for the first year of operations ended October 31, 2019.
West Gate Auto Co.
Statement of Accounts
October 31, 2019
Cash
5,000
Billings Due from Others.
Supplies (chemicals, etc.)
Building...
40,000
7,500
222,300
Equipment..
50,000
Amounts Owed to Others..
31,000
Investment in Business
179,000
Service Revenue
215,000
Wages Expense
75,000
Utilities Expense
10,000
8,000
Rent Expense .
Insurance Expense
Other Expenses
6,000
1,200
425,000
425,000
Explain to Joan Whalen why a set of financial statements (income statement,
1.
statement of owner's equity, and balance sheet) would be useful to you in evaluating
the…
Juice World Jamaica Limited, a leading juice manufacturing company has recently hired you as
an Accounting Officer. As per job description, you are required to assist in the preparation of the
financial statements. The Accounts Manager has extracted a list of balances as at December 2021
for you to review.
Revenue
7 600 010
Administrative Expenses
2 300 000
Distribution Costs
980 231
Interest paid on loan
Purchases
125 000
4 500 330
1 018 900
Inventories at 1 January 2021
Trade receivables
630 340
Provision for doubtful debts at Jan 2021
19 634
Bad debts
70 110
Non- current Investment
300 900
Additional notes
i.
Provide for Administrative Expenses of $500 000 paid in advance at 31 December 2021
and Distribution Costs of $50 528 owing at 31 December 2021
Provision for Doubtful Debts is to be maintained at 10% of receivables
ii.
iii. Inventories at 31 December 2021 were valued at $1 000 000
iv. Provide for corporation tax of S80 000 which is payable on October 1, 2022
Loan interest…
You have been recently hired as an assistant controller for XYZ Industries, a large, publically held manufacturing company. Your immediate supervisor is the controller who also reports directly to the VP of Finance. The controller has assigned you the task of preparing the year-end adjusting entries. In the receivables area, you have prepared an aging accounts receivable and have applied historical percentages to the balances of each of the age categories. The analysis indicates that an appropriate estimated balance for the allowance for uncollectible accounts is $180,000. The existing balance in the allowance account prior to any adjusting entry is a $20,000 credit balance.
After showing your analysis to the controller, he tells you to change the aging category of a large account from over 120 days to current status and to prepare a new invoice to the customer with a revised date that agrees with the new category. This will change the required allowance for uncollectible accounts…
Chapter 4 Solutions
Bundle: Accounting, Chapters 1-13, 26th + Working Papers, Chapters 1-17 For Warren/reeve/duchac's Accounting, 26th And Financial Accounting, 14th + ... For Warren/reeve/duchac's Accounting, 26th
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