Problem 3-28 Comprehensive cycle problem: Periodic system
The following trial balance pertains to Nate’s Grocery as of January 1, 2012:
Account Title
Cash
Accounts receivable
Merchandise inventory
Accounts payable
Common stock
Retained earnings
Totals
Beginning Balances
$26,000
$4,000
$50,000
$4,000
$43,000
$33,000
$80,00
The following events occurred in 2012. Assume that Nate’s uses the periodic inventory
method.
1.
2.
3.
4.
5.
6.
7.
Purchased land for $9,000.
Purchased merchandise on account for $96,000, terms 1/10 n/45.
Paid freight of $1,000 cash on merchandise purchased FOB shipping point.
Returned $3,600 of defective merchandise purchased in Event 2.
Sold merchandise $86,000 cash.
Sold merchandise on account for $90,000, terms 2/10 n/30.
Paid cash within the discount period on accounts payable due on merchandise
purchased in Event 2.
8. Paid $11,600 cash for selling expenses.
9. Collected $50,000 of the accounts receivable from Event 6 within the discount
period.
10. Collected $40,000 of the account receivable but not within the discount period.
11. Paid $6,400 of other operating expenses.
12. A physical count indicated that $47,600 of inventory was on hand at the end of
the accounting period.
Required
a. Record the above transactions in a horizontal statements model like the following
one.
Event
Balance Sheet
Assets
=
Equity
Accts. Mdse.
Accts. Comm.
Ret.
Cash + Rec + Inv. + Land = Pay. + Stock + Earn.
Income Statement
Rev. – Exp. = Net Inc.
b. Prepare a schedule of cost of goods sold and an income statement.
Statement of
Cash Flows
Problem 4-21 Adjustments to the cash account based on the bank reconciliation
Required
Determine whether the following items included in Yang Company’s bank reconciliation
will require adjustments or corrections on Yang’s books.
a. An $877 deposit was recorded by the bank as $778.
b. Four checks totaling $450 written during the month of January were not included
with the January bank statement.
c. A $54 check written to Office Max for office supplies was recorded in the general
journal as $45.
d. The bank statement indicated that the bank had collected a $330 not for Yang.
e. Yang recorded $500 of receipts on January 31, which were deposited in the night
depository of the bank. These deposits were not included in the bank statement.
f. Service charges of $22 for the month of January were listed on the bank
statement.
g. The bank charges a $297 check drawn on Cave Restaurant to Yang’s account.
The check was included in Yang’s bank statement.
h. A check of $31 was returned by the bank because of insufficient funds and was
noted on the bank statement. Yang received the check from customer and thought
that it was good when it was deposited into the account.
