Intermediate Accounting | Question and Answer

Intermediate Accounting 1

E 7-2
LO2
1. Cash and cash equivalents balance
$
Cash in hand- checking amount 22500
Cash on hand (currency and coins) 5000
Government bonds (six months maturity) -
Customer checks remain undeposited 1840
Government bonds (60 days maturity) 5000
34340
2. Some items are not included while determining the cash and equivalents balance such as:
According to IAS 7 the bonds which are issued by government and the maturity period are less than
3months from the date its issuance (Venter, 2016).
Undeposited check received from customers has not been considered as postdated so it is recorded to
compute the correct balance.
E 7-7
LO4
1. Return inward (Return inward) Account Dr. $450000
Account receivable (Debtors) Cr. $450000
(Being sales return recorded)
Stock or inventory Account Dr. 292500
Cost of Sales ($450000 X 65 percent) Cr. 2925000
(Being COGS reduced and the system of perpetual inventory has been assumed)
Return inward Dr. 10000
Allowance for Return inward Cr. 10000
(Being sales returns has been adjusted)
($11500000X 4% ̶ $450000)
Stock (Inventory) [expected returns] Dr. 6500
COGS Cr. 6500

2. Year-end adjustment entry
Opening balance 300000
Addition: Adjustment (Year-end) 10000
Closing Balance 310000
E 7-26: Bank Reconciliation
Jensen Company
Bank Reconciliation Statement
As of 31st May, 2013
Particulars
Amount in
$
Bank balance as per books 23820
Less: Deposits outstanding 2340
Less: Bank charges 38
Add: Checks outstanding 1890
Balance as per bank statement 23332
E 7-24: Petty Cash
Loucks Company
Journal Entries for Petty Cash
Particulars Debit
($)
Debit
($)
Petty Cash 200
To Cash 200
Office expenses (supplies) 76
Lunch expenses 48