The current assets and current liabilities sections of the balance sheet of Alle
ID: 2415364 • Letter: T
Question
The current assets and current liabilities sections of the balance sheet of Allessandro Scarlatti Company appear as follows.
ALLESSANDRO SCARLATTI COMPANY
BALANCE SHEET (PARTIAL)
DECEMBER 31, 2014
The following errors in the corporation’s accounting have been discovered:
Cash, not including cash sales, collected in January 2015 and entered as of December 31, 2014, totaled $37,812. Of this amount, $26,362 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan
1. Calculate the following adjusted balances.
Cash
Accounts Receivable
Inventory
Accounts Payable
Notes Payable
2. estate the current assets and current liabilities sections of the balance sheet in accordance with good accounting practice. (Assume that both accounts receivable and accounts payable are recorded gross.)
3. State the net effect of your adjustments on Allessandro Scarlatti Company’s retained earnings balance.
ALLESSANDRO SCARLATTI COMPANY
BALANCE SHEET (PARTIAL)
DECEMBER 31, 2014
Explanation / Answer
Answer:1
Answer:2
Answer:3
Cash Balance 47130 cash Disbursement after discount ($39600*98%) 38808 85938 Cash sales in jan ($31950-$29200) 2750 Cash Collected on Account 26362 Bank Loan Proceeds ($37812-$26362) 11450 Adjusted cah balance 45376 Accounts Receivable balance 97220 Accounts reduced from jan collection 26900 ($26362+$538=$26900) 124120 Accounts receivable in jan 29200 Adjusted Accounts receivable 94920 Inventories 178940 Inventory received on consignment 12000 Adjustment to inventory 166940 Accounts payable balance 68340 Cash Disbursement 39600 Purchase invoice omitted 18900 Adjusted accounts payable 126840 Notes payable balance 75590 Proceeds of bank loan 11450 Adjusted notes payable 64140Related Questions
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