In this module you will be required to record: (1) payment of a short-term note, (2) write of a bad debt using the ‘direct write-off method,’ (3) collection of a short-term note receivable, (4) sale of an obsolete plant asset.

Transaction for June 17 – June 23

______________________________________________________________________________ June 17: Payment of an account payable balance after the discount period has expired Brandon’s Cabinet Shop paid the overdue account of Bright-Way Cabinets, issuing a check for the account balance of May 25. Bright-Way Cabinet’s credit term are 2/10, net/20. Find the balance of Bright-Way Cabinets and record the late payment of the May 25 invoice.

Check Number: 45006. Invoice Number: BW110. Vendor Number: 21500.

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June 17: Record the payment of a note payable

Brandon’s Cabinet Shop issued a check for payment of one of its notes payable. The amount and terms of the note dated May 3 are $12,000 at 9% interest. Be sure to use exact days and a 360 day 'banker's year' for your interest calculation. Check Number: 45007. Invoice Number: NTPAY (note payable).

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June 18: Record the payment of an account payable

Brandon’s Cabinet Shop issued a check to Bright-Way Cabinets for invoice BW250. June 18 is the last day of the discount period. Check Number: 45008. Invoice Number: BW250. Vendor Number: 21500.

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June 18: Record the direct write-off of an uncollectible account receivable

Brandon’s Cabinet Shop received notice that Franks’ Cafe is no longer in business. Repeated notices to Frank’s Cafe of the overdue account of $600.00 have gone unanswered. Record the write off of the account. Because bad debts for Brandon’s Cabinet Shop have been less than 1⁄2% of credit sales, the accountant for Brandon’s Cabinet Shop uses the direct write-off method of recognizing uncollectible accounts. Invoice Number: WROFF (write-off). Customer Number: 10830.

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June 19: Record the collection of a note receivable

A check was received for payment in full of a $500.00, 6%, 90 day short-term note receivable. Interest earned has not been accrued on this note. Use the ‘banker’s year’ of 360 days to compute the interest. Invoice Number: NTREC (note receivable).

June 20: Record the purchase of store fixtures

Brandon’s Cabinet Shop purchased store fixtures on account from West Brook Supplies. The list or catalog price of the store equipment was $7,200.00 with a trade discount of 20% (The store fixtures will be purchased for 80% of the catalog price). Invoice Number: WB688. Vendor Number: 29900.

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June 20: Record the disposal of an old asset

The store fixtures purchased from West Brook Supplies included a state-of-the-art cash register. Brandon’s Cabinet Shop sold the old cash register for its book value to a small business. The original cost of the cash register was $3,200.00. The current balance of its accumulated depreciation is $2,700.00. Depreciation on the register is $100.00 per calendar quarter. Record the sale of the old cash register. Two entries are required: (1) record the depreciation for the calendar quarter and type DEPRE at the invoice prompt and (2) record the sale of the cash register for cash and enter ASALE as the invoice prompt.

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June 23: Record the sale of cabinets on account

Roberts of Roseville purchased cabinets for $4,800.00. Invoice Number: B3457. Customer Number: 11700.

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June 23: Record the completion of a cabinet installment paid for in advance

Brandon’s Cabinet Shop completed the installment of the cabinets purchased on June 13. The installment fees were paid in advance. The invoice was issued on June 13. Record the completion of the installment. Invoice Number: B3456.

Heads Up:

In this module you will be required to record the: (1) recovery of a bad debt, (2) payment of csh dividend declared, (3) replenish a petty cash fund, and (5) required journal entries for a bank reconciliation.

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Transactions for June 24- 30 and bank Reconciliation

June 24: Record the recovery of a bad debt

Today, an agent for Frank’s Cafe remitted a check for the account which was previously written off on June 18. Examine the subsidiary ledger for accounts receivable to find the sales invoice number and the amount of the direct write-off. Invoice Number: RECOV (recovery). Customer Number: 10830.

Two entries are required:

1. reinstate the account (reverse the June 18 write-off entry)

2. record the receipt of the check

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June 25: Record the payment of the declared cash dividend

Record the payment of the cash dividend declared on June 9. Check number 45009. Invoice Number: DIVPD (dividend paid).

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June 25: Record the collection of an account receivable

Jon Baker submitted a check for $11,530.60 for payment on a sales invoice dated May 12. Invoice Number: B3401. Customer Number: 10100.

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June 26: Record the payment of an account payable

Brandon’s Cabinet Shop issued a check to Visionary Finishes for its invoice dated June 16. The invoice amount is $650.00 and Visionary Finishes offers credit terms of 2/10, n/30. Credit Shop Supplies Expense (603) for the discount. Check Number: 45010. Invoice Number: VF806. Vendor Number: 28500.

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June 26: Record the payment of an account payable

Brandon’s Cabinet Shop issued a check to West Brook Supplies for its invoice dated June 20. Review the West Brook Supplies account for the amount of the invoice and the credit terms. Check Number: 45011. Invoice Number: WB688. Vendor Number: 29900.

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Brandon’s Cabinet Shop – Module 4

Copyright © 2011 PKL Software, Incorporated. All rights reserved. Last Revised: December 2, 2018

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June 30: Record the replenishment of the Petty Cash Fund

The Petty Cash account is maintained at $50.00. At the end of June, the bookkeeper submitted the following details of issued petty cash vouchers and the cash on hand in the petty cash fund container. Be sure to account for any possible overage or shortage.

Shop Supplies Miscellaneous Expense Cash on hand

$30.00 16.30 2.70

Record the replenishment of the petty cash. Check Number: 45012. Invoice Number: PC630 (petty cash for June 30).

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June 30: Record the payment of expenses

Record the issuance of the following checks:

Check Account Title Number

45013 Telephone Expense

45014 Utilities Expense

45015 Salaries and Wages Expense

Record three (3) separate journal entries.

Invoice Invoice Number Amount

AT408 6940X PAYRL

$183.00

$416.00 $1,800.00

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June 30: Record the payment of sales tax payable

Brandon’s Cabinet Shop issued a check to the State Board of Equalization for sales tax collected through June 23 (see your June 23 Trial Balance or Sales Tax ledger card). Debit Sales Tax Payable and credit Cash. Check Number: 45016. Invoice Number: SALTX (sales tax).

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June 30: Record the collection of an account receivable

Find the balance owed to Brandon’s Cabinet Shop by John’s Cabinet and record the cash collection of the May 6 invoice. John’s Cabinets will not be charged interest on the overdue account. Invoice Number: B3985. Customer Number: 11300.

Prepare Journal entry from June 17 - June 23 and bank transaction from 24- 30 bank reconciliation and answer the following questions.

1. From the closing entries, what is the amount of the first credit to the Income Summary account?

2. From the closing entries, what is the amount of the first credit to the Retained Earnings account?

3. Identify by account number the customer with the largest outstanding balance.

4. What was the June 17 balance of the Bright-Way Cabinets account payable?

5. What was the amount of the payment to San Juan Lumber (26600) on June 30?

6. What was the number of the vendor invoice that was paid in full on June 6?

7. What is the correct ending balance of the Manageable Space customer account (11450)?

8. What was the correct balance of the Cash account at the close of the business day on June 25?

9. What was the largest correct balance in the Cash account during the month of June?

10. What was the largest correct balance in the Merchandise Inventory account during the month of June?

11. Before closing, what was the balance of the Interest Earned account?

12. Before closing, what was the ending balance of the Bank Service Charges account?

13. What are the Net Sales for the quarter?

14. What is the Gross Profit From Sales and Installation Revenue for the quarter?

15. What are the Total Selling Expenses for the quarter?

16. What is the total amount of depreciation expense recognized this quarter?

17. What are the Total Operating Expenses for the quarter?

18. What is the Income From Operations for this quarter?

19. What is the Net Income for the quarter?

20. If Sales Returns and Allowances were reduced to zero, what would be the total for Gross Profit From Sales and Installation Revenue?

21. Is the Total Cost of Goods Sold greater than 73.25% of Net Sales? Round all percent calculations to the nearest hundredth.

A) Yes

B) No

22. Last quarter the Total Selling Expenses were 10.85% of Net Sales. Does this quarter show an improvement over the last quarter?

A) Yes

B) No

23. How much has stockholders' equity increased during the quarter ended June 30?

24. What is the book value of the Shop Equipment?

25. Does Brandon's Cabinet Shop have enough cash to meets its current liabilities?

A) Yes

B) No

26. Are Total Current Assets greater than 70.69% percent of Total Assets?

A) Yes

B) No

27. Current ratio = Current Assets/Current Liabilities. Is the current ratio less than 9.87 (round to 2 decimal places)?

A) Yes

B) No

28. Which is usually the last account listed on a corporation's Post-Closing Trial Balance?

A) Cash

B) Common Stock

C) Dividends

D) Income Summary

E) Retained Earnings

29. After closing, what is the balance of the Income Summary account?

A) The total of all revenue accounts

B) The total of all asset accounts

C) The total of all expense accounts

D) The same as the balance of retained earnings

E) None of the above

30. What is the balance of the Retained Earnings account after closing?