MBA560 Financial and Managerial Accounting: Module 2 Homework (P3-28 and P4-21)

MBA560 Financial and Managerial Accounting
Module 2 Homework (P3-28 and P4-21)

Problem 3-28 Comprehensive cycle problem: Periodic system
The following trial balance pertains to Nate’s Grocery as of January 1, 2012: Account Title Beginning Balances Cash 26,000 Accounts receivable 4,000 Merchandise inventory 50,000 Accounts payable 4,000 Common stock 43,000 Retained earnings 33,000 Totals 80,000

The following events occurred in 2012. Assume that Nate’s uses the periodic inventory method.
1. Purchased land for $9,000 cash.
2. Purchased merchandise on account for $96,000, terms 1/10 n/45.
3. Paid freight of $1,000 cash on merchandise purchased FOB shipping point.
4. Returned $3,600 of defective merchandise purchased in Event 2.
5. Sold merchandise $86,000 cash. 6. Sold merchandise on account for $90,000, terms 2/10 n/30.
7. Paid cash within the discount period on accounts payable due on merchandise purchased in Event 2.
8. Paid $11,600 cash for selling expenses.
9. Collected $50,000 of the accounts receivable from Event 6 within the discount period.
10. Collected $40,000 of the account receivable but not within the discount period.
11. Paid $6,400 of other operating expenses.
12. A physical count indicated that $47,600 of inventory was on hand at the end of the accounting period.

a. Record the above transactions in a horizontal statements model like the following one.
b. Prepare a schedule of cost of goods sold and an income statement.

Problem 4-21 Adjustments to the cash account based on the bank reconciliation

Determine whether the following items included in Yang Company’s bank reconciliation will require adjustments or corrections on Yang’s books.
a. An $877 deposit was recorded by the bank as $778.
b. Four checks totaling $450 written during the month of January were not included with the January bank statement.
c. A $54 check written to Office Max for office supplies was recorded in the general journal as $45.
d. The bank statement indicated that the bank had collected a $330 note for Yang.
e. Yang recorded $500 of receipts on January 31, which were deposited in the night depository of the bank. These deposits were not included in the bank statement.
f. Service charges of $22 for the month of January were listed on the bank statement.
g. The bank charges a $297 check drawn on Cave Restaurant to Yang’s account. The check was included in Yang’s bank statement.
h. A check of $31 was returned by the bank because of insufficient funds and was noted on the bank statement. Yang received the check from customer and thought that it was good when it was deposited into the account.
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