ASSIGNMENT #4

Chapter 9 from Hermanson Book (?Receivables and Payables?)

& Chapter 8 (?Cash, Petty Cash, Bank Reconciliations, Internal Control?) from the Edwards textbook

• The cash account in the general ledger for Mattie Confectionary Co. on March 31,2014, shows a balance of $16,450.00. The company?s bank statement reports an ending balance of $18,345.00 for March 31, 2014. Comparing the bank statement, the canceled checks, and the accompanying memorandums with the records revealed the following reconciling items:

a.	Checks outstanding totaled $3,620.00
b.	A deposit of $4,496.00 had been made too late to appear on the bank statement.
c.	A check for $1,233.00 returned with the statement had been incorrectly recorded as $233.00. The check was originally credited to accounts payable.
d.	The bank collected $4,541.00 on a note left for collection.
e.	Bank service charges for March amounted to $25.00.
f.	A check for $745.00 was returned by the bank because of insufficient funds.

Prepare a bank reconciliation as of March 31, 2014. Also record the necessary journal entries related to the bank reconciliation. Use the answer sheet provided.

2) Using the answer sheet provided, prepare entries to record the following petty cash transactions:

(a)	Carter Inc. established a petty cash fund of $350.
(b)	Carter, Inc.?s petty cash fund now has a balance of $75.80. The Company replenished the fund, based on the following disbursements as indicated by a summary of the petty cash receipts: office supplies expense, $89.50; miscellaneous administrative expense, $108.75; and miscellaneous selling expense, $65.60.
(c)	Carter Inc. increased the petty cash fund to $400.

3) Mesa Camping Equipment Company?s balance sheet dated December 31, 2013 reported Accounts Receivable of $400,000 and a credit balance in Allowance for Doubtful Accounts of $32,000. During 2014, Mesa Camping Equipment had the following transactions: sales on account $1,500,000; sales returns and allowances, $50,000; collections from customers, $1,250,000; accounts written off $36,000; previously written off accounts of $6,000 were collected.

Instructions

(a) Prepare the journal entries for the 2014 transactions.

(b) If the company uses the percentage of sales basis to estimate bad debts expense and anticipates 3% of net sales to be uncollectible, what is the adjusting entry at December 31, 2014?

(c) If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 8% of accounts receivable, what is the adjusting entry at December 31, 2014?

4) Holly Transport Inc. had the following transactions related to accounts and notes receivable.

Apr. 1, 2013 Accepted Brando Company's 1-year, 12% note in settlement of a $25,000 account receivable.

July 1, 2013 Loaned $15,000 cash to Laurel Bailey on a 9-month, 10% note.

Dec. 31, 2013 Accrued interest on all notes receivable.

Apr. 1, 2014 Received principal plus interest on the Brando note.

Apr. 1, 2014 Laurel Bailey dishonored its note: Holly Transport, Inc. expects it will eventually collect.

Instructions

Prepare journal entries to record the transactions. Holly Transport Inc. prepares adjusting entries once a year on December 31.

5) On January 2nd Perry Company borrows $12,500.00 cash on a note payable from Manny Financial Company with terms 90 days, 12%. Perry Company and Manny Financial Company uses a 360 day year for interest calculations. Perry Company makes adjusting entries at the end of each calendar quarter. Prepare the journal entries for Perry Company for (a) the initiation of the loan, (b) the recognition of interest expense for the quarter and (c) the payment of the note on its due date.

6) The following is a summary of Taylor Trucking Company?s payroll for the monthly pay period ending July 15 indicated the following:

Sales salaries	$125,000
Federal income tax withheld	32,300
Office salaries	30,000
Medical insurance withheld	7,370
Social security tax withheld	10,200
Medicare tax withheld	2,550

On the answer sheet provided, prepare the journal entries to record (a) the payroll and (b) the employer's payroll tax expense for the month. The state unemployment tax rate is 3.1%, and the federal unemployment tax rate is 0.8%. Only $30,000 of salaries are subject to unemployment taxes.

Assignment #4 Answer Sheet Problem #1: (a) Mattie Confectionary Company Bank Reconciliation March 31, 2014 (b) Journal Post Ref Date Description Debit 8-1 Credit Problem #2: Journal entries for Petty Cash transactions Date Description Post Ref 8-2 Debit Credit Problem #3: Date (a) Journal Entries for 2014 transactions Description Post Ref Debit Credit (b) Journal entry to record Bad Debt Expense using the percentage of sales method Post Ref Date Description Debit Credit (c) Journal entry to record Bad Debt Expense using the percentage of sales method Post Ref Date Description Debit Credit 8-3 Problem #4: Journal Entries for Holly Transport Inc. Date Description Post Ref 8-4 Debit Credit Problem #5: Journal Entries for Perry Company Transactions Date Description Post Ref 8-5 Debit Credit Problem #6: Journal Entries for Taylor Trucking Company Date Description Post Ref 8-6 Debit Credit 8-7