Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Ski Factory provided the following information at December 31, year 1. Bank Reconciliation General ledger cash balance, 12/31/year 1 $ 35,132 Bank statement balance,

The Ski Factory provided the following information at December 31, year 1. Bank Reconciliation General ledger cash balance, 12/31/year 1 $ 35,132 Bank statement balance, 12/31/year 1 $ 32,612 Bank service charge (50 ) Deposits in transit 4,900 Returned customer checks marked NSF (750 ) Outstanding checks (2,712 ) Error in recording of office supplies 468 Adjusted cash balance,12/31/year 1 $ 34,800 Adjusted cash balance,12/31/year 1 $ 34,800

Marketable Securities:

The company invested $52,000 in a portfolio of marketable securities on December 22, year 1. The portfolios market value on December 31, year 1, had increased in value to $57,000.

Notes Receivable:

On November 1, year 1, The Ski Factory sold 250 pairs of skis to Arctic Lodge for $130,000. The lodge paid $10,000 at the point of sale and issued a one-year, $120,000, 5 percent note for the remaining balance. The note, plus accrued interest, is due in full on October 31, year 2. The Ski Factory adjusts for accrued interest revenue monthly.

Accounts Receivable:

The Ski Factory uses a balance sheet approach to account for uncollectible accounts expense. Outstanding accounts receivable on December 31, year 1, total $900,000. After aging these accounts, the company estimates that their net realizable value is $870,000. Prior to making any adjustment to record uncollectible accounts expense, The Ski Factorys Allowance for Doubtful Accounts has a credit balance of $8,000.

Required:

a. Prepare the journal entry necessary to update the companys accounts immediately after performing its bank reconciliation on December 31, year 1.

b. Prepare the journal entry necessary to adjust the companys marketable securities to market value at December 31, year 1.

c. Prepare the journal entry necessary to accrue interest in December, year 1.

d. Prepare the journal entry necessary to report the companys accounts receivable at their net realizable value at December 31, year 1.

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

Step: 3

blur-text-image

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

Auditing And Assurance Services

Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Strawser

2nd Edition

0073128244, 9780073128245

More Books

Students also viewed these Accounting questions

Question

What are some global issues confronting women?

Answered: 1 week ago