Problem 2-11 Cash versus accrual accounting [LO2-8] Selected balance sheet infor

Question

Problem 2-11 Cash versus accrual accounting [LO2-8] Selected balance sheet information for the Wolt Company at November 30, and December 31, 2013, is presented below. The company uses the perpetual inventory system and all sales to customers are made on credit Nov. 30 Dec. 31 Cr. Accounts receivable Prepaid insurance Inventory Accounts payable wages payable Dr 9,600 4,600 6,600 Dr 2,600 7,100 5,600 11,600 4,600 14.600 2,600 The following cash flow information also is available a. Cash collected from credit customers, $76,000 b. Cash paid for insurance, $4,600 c. Cash paid to suppliers of inventory, $56,000 (the entire accounts payable amounts relate to inventory purchases) d. Cash paid to employees for wages, $9,600 Required 1. Determine the following for the month of December a Sales revenue b. Cost of goods sold C. Insurance expense d. Wage expense

Explanation / Answer

Ans 1 a. Calculation of sales revenue Cash collected from customers $ 76,000.00 Add : Closing balance of accounts receivable $    2,600.00 Less : Opening balance of accounts receivable $   (9,600.00) Total sales revenue $ 69,000.00 b. Calculation of cost of goods sold Cash paid to supplier $ 56,000.00 Add : Closing balance of accounts payable $ 14,600.00 Less : Opening balance of accounts payable $(11,600.00) Cost of goods sold $ 59,000.00 c. Calculation of insurance expenses Cash paid for insurance $    4,600.00 Add: Opening balance of prepaid expenses $    4,600.00 Less: Closing balance of prepaid expenses $   (7,100.00) Insurance expenses $    2,100.00 d. Calculation of wage expenses Cash paid to employees for wages $    9,600.00 Add : Closing balance of wages payable $    2,600.00 Less : Opening balance of wages payable $   (4,600.00) Wage expenses $    7,600.00 * You can calculate these amount by making "T" accounts as well. Ans. 2 Debit Credit 1 Accounts receivable (Debit) $ 69,000.00              Sales revenue (credit) $ 69,000.00 2 Cost of goods sold (Debit) $ 59,000.00             Inventory (credit) $ 59,000.00

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.