Problem 2:

CP7 on page 376, but instead of following the Instructions in the text, prepare the following:

1. Ignore GST and income tax. Prepare journal entries for the December transactions (you may omit narrations), incorporating the following additional information:

1) The perpetual inventory system and gross purchases method is followed.

2) The bookkeeper forgot to record a transfer of land to the business from one of the shareholders. The fair market value of the land (considered to be part of Property, Plant, & Equipment) was assessed at $100,000, and the business signed a two-year Notes Payable for that amount.

2. Follow instruction (c) in the textbook, but prepare the suggested journal entries prior to preparing the bank reconciliation, as you have learned in this course. You may assume that the NSF check was not redeposited.

3. Prepare the adjusting journal entries suggested by the Adjustment data in the text. Consider the following additional errors by the bookkeeper:

1) Prior to collection of the Notes Receivable, the bookkeeper had forgotten to accrue $20 of interest on the Notes Receivable. This will be received in January 2018.

2) The bookkeeper also forgot to accrue one month of interest on the Notes Payable (see 1) above), which has a 12% annual interest rate. The interest is payable semi-annually.

4. Incorporating all of the above, prepare a Statement of Comprehensive Income for December and a Balance Sheet as at December 31, 3017, both in the form and format prescribed in this course.

CP7 On December 1, 2017, Papadopoulos SA had the following account balances Debit Credit Cash Notes Receivable Accounts Receivable Inventory Prepaid Insurance Equipment 18,200 2,000 7,500 16,000 1,600 28,000 73,300 umulated Depreciation Equipment Accounts Payable Share Capital--Ordinary Retained Earnings 3,000 6,100 50,000 14,200 73,300 During December, the company completed the following transactions Dec. 7 Received 3,600 cash from customers in payment of account (no discount allowed) 12 Purchased merchandise on account from Spiro Co. 12,000, terms 1/10, n/30 17 Sold merchandise on account 16,000, terms 2/10, n/30. The cost of the merchandise sold was 10,000 19 Paid salaries 2,200 22 Paid Spiro Co. in full, less discount. 26 Received collections in full, less discounts, from customers billed on December 17 31 Received 2,700 cash from customers in payment of account (no discount allowed) Adjustment data 1. Depreciation 200 per month. 2. Insurance expired 400 Instructions (a) Journalize the December transactions. (Assume a perpetual inventory system.) (b) Enter the December 1 balances in the ledger T-accounts and post the December trans actions. Use Cost of Goods Sold, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Sales Revenue, and Sales Discounts (c) The statement from Athens Bank on December 31 showed a balance of 25,930. A comparison of the bank statement with the Cash account revealed the following facts 1. The bank collected a note receivable of 2,000 for Papadopoulos on December 15. 2. The December 31 receipts were deposited in a night deposit vault on December 31. These deposits were recorded by the bank in January 3. Checks outstanding on December 31 totaled 1,210 4. On December 31, the bank statement showed an NSF charge of 680 for a check received by the company from A. Quinn, a customer, on account. Prepare a bank reconciliation as of December 31 based on the available information. (Hint: The cash balance per books is 26,100. This can be proven by finding the bal- ance in the Cash account from parts (a) and (b).) (d) Journalize the adjusting entries resulting from the bank reconciliation and adjustment data (e) Post the adjusting entries to the ledger T-accounts (f) Prepare an adjusted trial balance (g) Prepare an income statement for December and a classified statement of financial pos ition at December 31