Reference no: EM13855689

I. Cash in the bank is composed of

Checking account: $324,935

Money market savings account= $100,000

Certificate of Deposit, 2% maturing on May 1 2013= $25,000

Certificate of Deposit, 1.5% maturing on January 15 2013= $50,000

Cash held as compensating balance to be held until January 1, 2015= $10,000

Requirement: make any necessary entries to correct the cash balance on the balance sheet.

II. Cash in the bank : consider the following information:

The checking account balance includes an NSF check for $5,000 (payment on an accounts receivable) that the company believes is collectable. Bank charges for December 2012 of $50 was not recorded by the company. A check that is dated December 31, 2012 for $34,000 was held and mailed by the company on January 15 (for an accounts payable balance)

Requirement: make any necessary entries.

III. The Big company purchased $2.5 million dollars of merchandise on account. Giant company gives terms of 1%, 10 days and net 20. Giant believes that Big will take the discount if the discount is equal to at least an 16% return. Giant uses the net method to record sales. The transaction was not recorded by Giant. Assume a 360 day year. Big paid 5 days past the discount period.

Requirement: make any necessary entries and/or adjustment as needed on the books of Giant.

IV. Giant has made only an interim preliminary entry for estimated bad debts. Mr. Smith, the controller for Giant, wants you to determine what the proper entries will be, given the following information and also asks for your recommendation (prepare a schedule to support your calculations) as to why you chose a particular method.

Time and amount (000s) Percentage estimated to be uncollectible

Amount considered uncollectible $180

Amount over 180 days=$1,700,000 60%

Amount over 90 days= $2,850,000 30%

Amount over 60 days= $9,100,000 15%

Amount over 30 days=$25,200,000 4%

Remaining amount current .05%

Requirement: What would the entries and amounts be under the following methods: direct write-off, percentage of sales (use .005 of Giant's net sales) and the aging method. Make any necessary entries and/or adjustments as needed.

V. Giant accepts a 5 year, $40,000 note from Small company. The note is for the purchase of inventory form Giant. The terms are, 0% interest, due 5 years from July 1st of this year and was issued July 1st of this year. The market rate of interest for a similar note is 8%. Giant did not make the entries.

Requirement: make any necessary entries and/or adjustments as needed.

VI. The following data regarding item A is provided. Consider 2009 as the first date data was kept. ie. there is no beginning inventory for 2010:

Inventory layers year cost(at base year prices) index

base year purchase 2010 $16,000 125

purchases 2011 10,000 135

purchases 2012 8,000 150

Requirement: using the above information calculate ending inventory at LIFO cost.

VII. Use following info for Middle company:

- sales account included an $800,000 (net of tax) loss due to flood destroying a facility, never happened before.

- the account gain/loss from sale of investment included the selling of a small division (a segment of Giant) for $4 million. prior to sale the division had generated income of $1 million. Income from operating activities is $1.6 million and tax rate is 40%. how do you treat these two events in balance sheet or income statement. show calculation.

VIII. Consider following for a construction contract.

The construction begun at Jan 1 2010.

Contract price:$18,000,000.

Cost for 2010: 3.2 million, cost for 2011: 5,760,000, cost for 2012: 3,840,000 (these costs are discrete)

Estimated costs to complete as of the end of 2010 is 10,800,000 , estimated cost to complete as of the end of 2011 is $4,000,000. Billing to company in 2010 was 3,000,000 for 2011 was $5,000,000 with the remaining billing during 2012

Requirement: prepare a schedule showing the effect on the income statement and balance sheet under the percentage -of- completion vs. the completed contract method. Prepare the entries that would have been made for each of three years under both method