Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Thank you for your help!! Murdstone Co. You've just been hired as an accountant at the Murdstone Co., a retailer of supplies for arts and

Thank you for your help!!

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Murdstone Co. You've just been hired as an accountant at the Murdstone Co., a retailer of supplies for arts and crafts. Since the previous accountant left his position suddenly, the controller of Murdstone Co. has asked for your assistance in filling in some missing data for the company's January accounting records. You'll also be responsible for training the company's new accounting intern. Chart of Accounts CHART OF ACCOUNTS Murdstone Co. General Ledger ASSETS REVENUE 110 Cash 410 Sales 111 Petty Cash 610 Rent Revenue 112 Accounts Receivable 115 Merchandise Inventory EXPENSES 510 Cost of Merchandise Sold 117 Office Supplies 118 Prepaid Insurance 516 Cash Short and Over 120 Land 520 Sales Salaries Expense 123 Store Equipment 521 Advertising Expense 124 Accumulated Depreciation-Store Equipment 522 Depreciation Expense-Store Equipment 125 Office Equipment 523 Delivery Expense 126 Accumulated Depreciation Office Equipment 529 Miscellaneous Selling Expense 530 Office Salaries Expense LIABILITIES 531 Rent Expense 210 Accounts Payable 532 Depreciation Expense-Office Equipment 211 Salaries Payable 533 Insurance Expense 212 Unearned Rent 534 Office Supplies Expense 213 Customer Refunds Payable 539 Miscellaneous Administrative Expense 215 Notes Payable 710 Interest Expense EQUITY 310 Edward Murdstone, Capital 311 Edward Murdstone, Drawing Murdstone Co. Chart of Accounts Cash Short and Over Petty Cash Bank Reconciliation The controler has complicted the accounts for the Cash and Sales Accounts as of January 30, but needs to attend an important conference in another city. She has requested that you prepare the account for the Cash Short and Over account as of January 30 also. You are told that the balance of the account is zero as of the beginning of January, and that all the comparty's sales are in cash. Review the following accounts, and then scroll down to complete the Cash Short and Over Taccount and answer the associated question that allows i Cash Balance 11/15 5,500 1:2/45 Establish Polly Cash 500 1/SYS 2,800 1712145 5.230 1295 3,270 1/30/Y5 4,450 Balance 21,750 Sales Balance 1/1/15 n 1/5/45 2,905 1/12/Y5 6,205 1.23185 3,300 1:30145 4,390 Balance 16,700 Review the T accounts previously shown, and then complete the Cash Short and Over T account and the following associated question. Cash Short and Over Balance 1/1/15 0 Balance What will happen to the ending balance in the Cash Short and Over account at the end of the accounting period? It will be added to the Other revenue section of the income statement. O The discrepancy must be reported on the company website. The discrepancy must be reported to the Securities and Exchange Commission. O It will be a miscellaneous expense on the income statement. Petty Cash Murdstone Co. issued a check on January 2 to establish a petty cash fund of $500. On January 31, the amount of cash in the petty cash fund is $440. The company would like to issue a check to replenish the fund, based on the following summary of petty cash receipts: Account Amount on Receipt Office Supplies $30.00 Miscellaneous Administrative Expense 23.00 The company's policy is to record any missing funds in the Cash Short and Over account. The new intern has prepared a proposed journal entry to record the replenishing of the petty cash fund: PAGE 17 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 Jan. 31 Petty Cash 53.00 1 2 Cash 53.00 1 Prepare for your discussion with the intern by creating the corrected journal entry for the replenishment of the petty cash fund. Refer to the Chart of Accounts for exact wording of account titles. PAGE 17 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 The company's accounting intern has prepared the end-of-January bank reconciliation from the bank statement, and is worried because the Adjusted Balance amounts do not agree. After reviewing the bank reconciliation, scroll down for the next steps in helping the intern. Murdstone Co. Bank Reconciliation January 31, 2045 1 Cash balance according to bank statement $23,557.98 2 Deduct deposit of May 31, not recorded by bank 12,125.25 3 $11,432.73 4 Add outstanding checks: No. 124 5 $62.00 6 No. 125 86.00 7 No. 129 1,250.00 1,398.00 8 Adjusted balance $12,830.73 9 10 Cash balance according to Murdstone Co. $51,542.88 11 Add check returned because of insufficient funds 23,475.40 12 $75,018.28 13 Deduct: Note and interest collected by bank $15,250.75 14 Bank service charge 150.00 15 Error in recording Check No. 123 9,000.00 24,400.75 16 Adjusted balance $50,61753 You assist the intern to check source documents, and find that most of the dollar amounts are correct; however, two dollar amounts are incorrect. After reviewing the following table, scroll down for the next steps in helping the intern. Item Correct in Intern's Reconciliation? If "No," Corrected Amount Cash balance according to bank statement Yes Deposit of January 31, not recorded by bank Yes Outstanding check No. 124 Yes Outstanding check No. 125 No $68.00 Outstanding check No. 129 Yes Cash balance according to Murdstone Co. Yes Amount of check returned because of insufficient funds Yes Amount of note and interest collected by bank Yes Bank service charge No $15.00 Yes Company error in recording Check No. 123 as $12,435.00 rather than the correct amount of $21,435.00 After asking the intern to search for other errors by comparing her reconciliation to prior bank reconciliations prepared by the former accountant, you work together to compute the corrected Adjusted Balance. Enter your answer with two decimal places. Corrected Adjusted Balance amount: $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Valuation For Accountants A Short Course Based On IFRS

Authors: Stephen Lynn

1st Edition

9811503567, 9789811503566

More Books

Students also viewed these Accounting questions

Question

Are liquidity ratios appropriate for financial condition analysis?

Answered: 1 week ago

Question

What is the relationship between negative thinking and depression?

Answered: 1 week ago

Question

Do you strive to create a diverse workforce?

Answered: 1 week ago