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Dunlap Insurance Bank Reconciliation 31-Dec-12

ACC 205 - Week 4 Assignment Chapter 7, P 7-27A Chapter 7, P 7-31A Chapter 8, P8-26A Chapter 8, P8-27A Chapter 8, P8-32A

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563 views10 pages

Dunlap Insurance Bank Reconciliation 31-Dec-12

ACC 205 - Week 4 Assignment Chapter 7, P 7-27A Chapter 7, P 7-31A Chapter 8, P8-26A Chapter 8, P8-27A Chapter 8, P8-32A

Uploaded by

mshammelee
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Part 1

Dunlap Insurance Bank Reconciliation 31-Dec-12 BANK: Balance, December 31, 2012 Add: Deposits in transit Less: Outstanding checks: Check No. 1420 1421 1422 Adjusted bank balance, December 31, 2012 BOOKS: Balance, December 31, 2012 Add: EFT collection of rent Bank collection of note receivable Less: NSF check EFT payment of insurance Bank service charge Correction of book error Adjusted book balance, December 31, 2012 $ 17,350 $ 1,850 $ 19,200 $ 1,440 $ 900 $ 630 $ 2,970 $ 16,230

$ 16,740 $ 300 $ 1,400 $ 1,700 $ 18,440 $ 1,000 $ 700 $ 60 $ 450 $ 2,210 $ 16,230

Part 2 Date Accounts and Explanations 40908 Cash Rent revenue 31 Cash Note receivable 31 Accounts receivable Cash 31 Insurance expense Cash

Journal Entry Debit $ 300 $ $ 1,400 $ 1,400 $ 1,000 $ 1,000 $ 700 $ $ 60 $ 60 700 300 Credit

31 Miscellaneous expense (bank service charge expense) Cash

31 Rent expense Cash

$ 450 $ 450

Part 1 Part 2

Before replenishment, the petty cash fund should hold cash of $330 (500-170)

Date June

Journal Entry Accounts and Explanations 1 Petty cash Cash in bank To open the petty cash fund. 30 Entertainment expense (25+75) Office supplies expense (35+15) Postage expense Cash short and over Cash ($500 - $325) To replenish petty cash.

Debit Credit $ 500 $ 500

$ 100 $ 50 $ 20 $ 5 $ 175

Jul

1 Petty cash Cash in bank To increase petty cash fund.

$ 50 $ 50

Allowance Method Part 1 Date Sep Journal Entry Accounts and Explanations 30 Accounts receivable Sales revenue 30 Cash Accounts receivable 30 Uncollectible account expense ($590,000 .03) Allowance for uncollectible accounts 30 Allowance for uncollectible accounts Accounts receivable Direct write off method Part 2 Date Sep Journal Entry Accounts and Explanations 30 Accounts receivable Sales revenue 30 Cash Accounts receivable 30 Uncollectible account expense Accounts receivable Debit $ 590,000 $ $ 627,000 $ $ 7,000 $ 7,000 627,000 590,000 Credit $ 7,000 $ 7,000 Debit $ 590,000 $ $ 627,000 $ $ 17,700 $ 17,700 627,000 590,000 Credit

Part 3

Allowance method: 17,700. Direct write off method: 7,000. The uncollectibel account expense under the allowance method better matches expense than the direct write off method because the expense recorded in the sales are made. Balance sheet: Accounts receivable Less: allowance for uncollectibel accounts Accounts receivable, net Allowance Direct write off 111000 111000 16900 0 94100 111000

Part 4

The accounts receicable under the allowance method seem to be more realistic because it shows the amount of the receivables that the company expects to collect

$ $ bal $

Accounts receivable 155,000 $ 627,000 590,000 $ 7,000 111,000

Allowance for uncollectible $ 7,000 $ 6,200 $ 17,700 bal $ 16,900 Uncollectibel account expense $ bal $ 17,700 17,700

$ $ bal $

Accounts receivable 155,000 $ 627,000 590,000 $ 7,000 111,000

Uncollectible account expense $ 7,000 bal $ 7,000

Part 1 Date Dec $

Journal Entry Accounts and Explanations 28 Allowance for uncollectible accounts Accounts receivableRegan Co. Accounts receivableOwen Mac Accounts receivableRain, Inc. 31 Uncollectible account expense Allowance for uncollectible accounts

Debit 2,900

Dec

10,951 *

Supporting calculations for Uncollectibel account expense: 1-30 days 31-60 days 61-90 days over 90 days $97,000 x .003 $37,000 x .03 $14,000 x .30 $17,000 x .35 Ending credit balance: Beginning balance (3,500)- Dec 28 entry (2,900) + Adjusting amount (X)= Ending balance (11,551) 3500 -2900+X=11551 600 + X = 11551 X = 10951* Part 2 Allowance for uncollectible accounts $ 2,900 $ $ bal 11,551 Mountain Terrace Medical Center Balance Sheet (partial) $ Accounts receivable Less: Allowance for uncollectible accounts Accounts receivable, net $ $ $ 41,274 165,000 11,551 153,449 $ $ $ $ $ 291 1,110 4,200 5,950 11,551

3,500 10,951

Part 3

Credit $ $ $ 1,300 900 700

10,951

$ in thousands Part 1 2012 = 90+145+290)/560 = 0.94 = net sales/ 365 = 5860/365 = $ 16.05 = Aver. net receivables/one day's sales = ((260+290)/2) / 16.05 = 17 = net credit sales/average net A.C = 5860/ ((260+290)/2) = 21.31 = = = = =

Acid test ratio b) One days sales One day's sales Days in sales in receivable Days in sales in Rec. c) Accounts receivable turnover

Part 2

in 2011, acid test ratio is .84 while 2012 is .94 which is a significant improvement. this trend i The one day's sale is also favorable to the company since it's improved from 2011 to 2012 the accounts receivable improved from 2011 to 2012, this trend favorable to the company.

ands 2011 (70+175+260)/600 0.84

5140/365 $ 14.08

((250+260)/2))/14.08 18

5140/ ((250+260)/2) 20.16

icant improvement. this trend is favorable to the company

ved from 2011 to 2012

end favorable to the company.

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