Cash | | | | $ 44,300 | | Accounts payable | | $ 58,160 | Accounts receivable | | $94,400 | | | | Notes payable | | 66,420 | Less: Allowance for doubtful accounts | | 7,400 | | 87,000 | | | | $124,580 | Inventory | | | | 174,040 | | | | | Prepaid expenses | | | | 9,210 | | | | | | | | | | $314,550 | | | | |
The following errors in the corporation’s accounting have been discovered:
1. | | January 2018 cash disbursements entered as of December 2017 included payments of accounts payable in the amount of $39,900, on which a cash discount of 2% was taken. | 2. | | The inventory included $30,450 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $12,920 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30. | 3. | | Sales for the first four days in January 2018 in the amount of $28,760 were entered in the sales journal as of December 31, 2017. Of these, $21,910 were sales on account and the remainder were cash sales. | 4. | | Cash, not including cash sales, collected in January 2018 and entered as of December 31, 2017, totaled $33,168. Of this amount, $21,168 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan. |
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