Prepare the journal entries you believe are necessary to

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Reference no: EM13484481

You have the following ledger balances:

Cash: $153,700 debit balance

Accounts Receivable: $165,500 debit balance

Inventory: $264,000 debit balance

Accounts Payable: $177,300 credit balance

Other current liabilities: $55,900 credit balance

Upon investigation of the cash ledger cutoff you have found the following:

Cash receipts in the total amount of $179,800 were actually collected in October but were entered in the September cash receipts journal. Of this amount, $110,300 was for cash sales and $69,500 was for collections of accounts receivable for which cash discounts of $1,400 were given.
The September cash disbursements ledger included $87,500 that was actually paid in October. This amount paid a total of $88,500 of accounts payable. Cash discounts of $1,000 were taken.

A: Prepare the journal entries you believe are necessary to correct the year end balances for presentation to management for their consideration.

B: Prepare a brief memo to TCV Company's management explaining how the errors would have impacted the Company's working capital and current ratio by comparing the working capital and current ratio before and after the corrections. Include appropriate computations of the working capital and current ratio before and after the corrections.

Reference no: EM13484481

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