1) Shawnee Co

Subject:AccountingPrice: Bought3

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1) Shawnee Co. set up a petty cash fund for payments of small amounts. The following transactions involving petty cash fund occurred in May (the last month of the company’s fiscal year).

May 1 - Prepared a company check for $250 to establish the petty cash fund.

15 - Prepared a company check to replenish the fund for the following expenditures made since May.

a. Paid $78 for janitorial services.

b. Paid $63.68 for miscellaneous expenses.

c. Paid postage expenses for $43.50.

d. Paid $57.15 to The County Gazette (local newspaper) for an advertisement.

e. Counted $11.15 remaining in the petty cash box.

16 – Prepared a company check for $200 to increase the fund to $450.

31 – The petty cashier reports that $293.39 cash remains in the fund. A company check is drawn to

replenish the fund for the following expenditures made since May 15.

f. Paid postage expenses of $48.36.

g. Reimbursed the office manager for business mileage, $38.50.

h. Paid $39.75 to deliver merchandise to a customer, terms FOB destination.

31 – The company decides that the May 16 increase in the fund was too large. It reduces the fund by

$50, leaving a total of $400.

 

Required:

Prepare journal entries to establish the fund on May1, to replenish it on May 15 and on May 31, and to reflect any increase or decrease in the fund balance on May 16 and May 31.

 

Question #2

 

At December 31, 2011, Ethan Co reports the following results for its calendar-year.

Cash sales ………………. $1,803,750

Credit sales …………….. 3,534,000

 

In addition, its unadjusted trial balance includes the following items.

Accounts receivable ……………….……. $1,070,100 debit

Allowance for doubtful accounts ………… 15,750 debit

 

Required:

1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions.

a. Bad debts are estimated to be 2% of credit sales.

b. Bad debts are estimated to be 1% of total sales.

c. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.

2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on it December 31, 2011, balance sheet given the facts in part 1a.

3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2011, balance sheet given the facts in part 1c.