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13 QUES of acct 200 correspondence exam three version B 2

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Question;acct 200 correspondence exam three version B 2;I.Fortheyear2006KolarCompanyhasthefollowinginformationavailable.Usethisinformationtoanswer;qnestionsA,B,C,&D.;GrossCreditSalesof$90,000 SalesDiscountsof$4,000;DebitbalanceinAllowanceforDonbtfulAcconnts;(beforeadjustingentries);of$6,000BalanceinAcconnts;Receivable(beforeadjusting;entries)of$22,000.;AnswereachofthefollowingquestionsINDEPENDENToftheotherquestions. (10points);A.;IfKolarCompanyestimatesbaddebtexpense;tobe4%ofNetCreditSales;whatamountofbaddebtexpenseshouldbereportedonthe2006Income Statement?.;B.;IfKolarCompanyperforms;anagingofAccountsReceivable anddeterminesthat;$8,000worthof accountsareuncollectible,maketheadiustm<'ournalentrytorecordbaddebtsexpense;for2006.;C.;AssumethatonDecember;31,2006, KolarCompany;makesajournalentrytorecord$7,500ofBad DebtExpense. Assume that onJanuary1,2007(beforeanymorecredit;salesaremade)KolarCompany decidestowrite-offasuncollectiblea$1,000account;receivable.Aftermakingthisjournal;entry,what willbethenetrealizablevalueof accountsreceivable?;D.;AssumethatonDecember;31,2006,KolarCompanymakes a;journalentrytorecord$7,500ofBad DebtExpense. AssumethatonJanuruy;1,2007(before;anymorecredit;salesaremade)KolarCompany decidestowrite-offasnncollectiblea$1,000account;receivable.Ifthebookkeeperforgets;tomakethis;1ourna1entry,whatw1?nbethenetrear1zable va1ueofaccountsrece1?vable.?;II. Finley;Companyhadthefollowingtransactionsin2006. (9points);Jan;I Usedcashtopurchase;aminefor$70million.;Themineisestimatedtohave250,000tonsofore andasalvage;valueof$10million.;JulyI Purchasedapatentfor$1,500,000cash.Thepatent's;legallifeis17yearsbutthe company estimatesthepatent's;usefullifetobe5yearsbecauseatthattimethepatentwillnolongerhave anyvalue.;Dec29Paid cash forresearchanddevelopmentcostof$400,000 duringtheprevious12months. Maketheappropnategeneraljourna entriesforJan!,Julv1 &Dec29;MaketheappropriateadjustingentryonDecember;31forthemine(assume;50,000tonsoforeminedand;40,000tonssold);IIIJournalEntries;12points;Forthefollowing;situations,ifajournalentryisrequiredon December31toadjustthecashbalanceperthebooksmaketheappropriateentry. IfnoentryisrequiredwriteNONE.;Wh"1le;reconc1T1ngthebankstatementthecompanyd"1scoversthereare$4,000m.;outstandingchecks.;Whilereconcilingthebankstatement;thecompanydiscovers;thebankhaschargedthecompanyaservicechargeof$45forhavingsomechecksprinted.;Whilereconcilingthebankstatement;thecompanydiscovers;thebankhasmadeanerrorrelated;toacompanydeposit ofcashsales. Thebankadded$7,800;tothecompany'scheckingaccountwheninfact;therewas$8,100incashdeoosited.;Whilereconcilingthebankstatement;thecompanydiscovers;thatanotereceivablewithafacevalueof;$1,200hasbeencollected;forthecompany.Thetotalamountcollected;was$1,280with$100of interest;accruinganda$20bankcharge.;Noi?nterestrevenue;hasbeenrecordedre1atedtothenote.;Whilereconcilingthebankstatement thecompanydiscoversthatacashpaymenttoavendorintheamountof$250hasaccidentlybeenrecordedinthecashpayments1ournal;for$520.;IVEssay 5points;Thefollowing;narrativedescribesthebusiness;processatCompanyB. Afterreading;thenarrative, identifyandexplain;WHYeachSPECIFIC;internal controlweaknessatCompanyBisaviolationof goodinternal;control.;Rodneyisnormallyresponsibleforwritingallchecks.;Whenthebankstatement;arrivesRodneydoes thereconciliationofthebankstatementandreportsanydiscrepanciestotheowner. Inadditionto writing;thechecks,Rodneyisresponsibleforapprovingallvendor;invoicesforpaymentbeforehesigns andmailsthechecks. After writingthepayrollchecksRodney;leavesthepaychecksinanenvelope;in theemployeebreakroom. Inordertosavemoney;Rodneyorderschecksthatareunnumbered.;BecauseRodneyissometimesbusywithothertasks,twootheremployeesalsohavepermissiontosign andmailchecks.;V OnJanuary;1CompanyBestablishesapettycashfundin theamountof$200. OnFebruary20the necessarybalanceinthefundisincreased;to$250. OnFebruary;28"thepettycashfundisreplenished whenthereis only;$82cashleftinthepettycashdrawer. Thepettycashdrawer;includedpettycash vouchersasfollows. (8points);postageexpense $45;miscellaneousexpense$50 freight-out $55;MaketheionrnalentrvonFebrnarv20.;Makethejonrnal;entrytorep1enishthefnndonFebruary28;VI. OnOctober12,BradyStorhaugCompany;ownsaPorsche911Turbo;thatoriginallycost$40,000 andcurrentlyhasaccumulateddepreciationof$32,000. ThefairmarketvalueofthePorscheis$6,000. Storhaug;exchangesthisPorschefor;aCavalierwithafairmarket;valueof$9,000andpays$3,000cash toboot. MAKETHEJOURNAL;ENTRYTORECORD;THEEXCHANGEOFVEHICLESON STORHAUG'SBOOKS.;(6points);VII.;Usethefollowinginformationtomaketheappropriatejournal;entriesasrequired.;Sellin'Inc.receivedanotesreceivablefromBuyin'Inc onApril15. Thefacevalue of;thenotewas;$3,000withamaturitydateofJune15andamaturity;valueof$3,040.On;April30Sellin'properlycalculatedaccruedinteresttobe;$10.(6points);Makethe A?PrI"J30entrvrelatedtotheaccruaIofm;terestforSellI'D'Inc.;OnJune15Buyin'Inc.informedSellin'IncthatBuyin'waslowoncashandwouldnotbeabletopaythematurity;valueofthe note;untilJuly18. Assume;Sellin'madeanother;journalentryrelatedtotheaccrualofinterestonthenotereceivableonMay31for$20.Also,fromJune1toJune15assumeanother$10ofinterest;hasaccruedwithnojournal;entrybeingmade. Make;theappropriatejournalentryonSe11I'D'IUC. booksonJuue15;VIII.;Poorly;ManagedInc.had totalnetcredit;salesof$100,000. Atthebeginningoftheyear,PoorlyManagedhadabalance inaccounts receivableof$35,000andattheendoftheyearthisbalancehadincreasedto$65,000.;Theterms for;allofPoorlyManaged'screditsalesare 1/5,N30.;Therearenofinancecharges;onoverduebalances.;REQUIRED(7points);CalculatePoorlvMaua2ed'saccounts;receivableturnover;X.;Calculatingdepreciationexpense.;AbuildingisacquiredonJanuaryI,atacostof$300,000hasan;estimatedusefullifeof8years.;The;salvagevalue isestimatedtobe$25,000;attheendoftheasset'susefullife.;UsetheaboveinformationtoanswerthefollowingINDEPENDENTquestions.;A;Calculateaccumulateddepreciationattheendofyear2ifthestraight-linemethodisused(3 points).;$ year2;B;CalculatedepreciationexpenseforyearsI&2ifthedouble-decliningbalancemethodisused(5points).;$ year1;$ year2;C;Calculateaccumulateddepreciationattheendofyear2iftheunitsofactivity;methodisused andtheassetisexpected;tobeusedatotalof500,000;hours.Theasset willbeused75,000hoursinyearoneand90,000;hoursinyeartwo(3points).;$ year2;XI.;JoyceCompany hasissneda4-month;9%,$6,000notereceivabletoacustomer.;Calculatethe following;(9pts).;FaceValue;------;Totalinteresttoaccrueover;the4-monthtime;periodofthenote;Maturityvalue;ofthenote----------;Onthematurity;date,thecustomer;paysJoyceCompanythematurity;valueofthenote.;Makethe requiredjournal;entryonthematuritydateassumingNOadjustingentries;havebeenmadeforinterest;revenue.;XII.;RodneyCompany;hasamachine thatoriginallycost$32,000andhasbeendepreciatedatotalof;$20,000. AfterfiveyearsRodneysellsthe machinefor$15,000 (7points).;Calculatethebook;valueofthemachine;Calculatethegain;(loss)onthedisposalofthemachine;XIII. Thefollowing;informationisavailableforJonesCompany;forthemonthended April30;A. ThebalanceperthebankstatementasofApril30was$6440.55;B. ThecashaccountbalanceinthegeneralledgerasofApril30was$5,835.55.;C. Acustomer'scheckwasreturned;withtheAprilbankstatementmarkedNSFfor$123.ThiswasthefirsttimeJonesCompany;hadbeennotified;thecheckbounced.;D. JonesCompanyincorrectlyrecordedacashpaymentfor$469.;Thecorrect;amountofthe paymentwas$649.;E.;DepositsintransitasofApril;30equaled$1,200.25.;F. Thebankstatementincluded;adebitmemofor$24.75asacheckprinting;charge.;G. Anotecollected;bythebankonApril28hasnotyetbeenrecorded;inJones'Company;cash receiptsjournal. Thefaceamountofthenotewas$2,000andtheinterest;was$150. The bankcharged;acollectionfeeof$17.NOTE:**JonesCo.;hasalreadyrecordedallofthe interestrevenne.**NOTE;Reqnired (10points);A PrepareabankreconciliationforJones CompanyforApril30.;BalanceperBankStatement;Balanceper;Books

 

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