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Blossom Co. Balance Sheet (Partial) As of December 31, 2017 Cash $19,100 Accounts payable $28,400 Accounts...

Blossom Co.
Balance Sheet (Partial)
As of December 31, 2017
Cash $19,100 Accounts payable $28,400
Accounts receivable $38,200 Notes payable 14,000
    Less: Allowance for doubtful accounts 2,100 36,100 Unearned revenue 2,800
Inventory 61,500 Total current liabilities $45,200
Prepaid expenses 6,100
Total current assets $122,800


The following errors in the corporation’s accounting have been discovered:

1. Keane collected $4,700 on December 20, 2017 as a down payment for services to be performed in January, 2018. The company’s controller recorded the amount as revenue.
2. The inventory amount reported included $2,200 of merchandise that had been received on December 31, 2017 but for which no purchase invoices had been received or entered. Of this amount, $1,000 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30.
3. Sales for the first day in January 2018 in the amount of $11,400 were entered in the sales journal as of December 31, 2017. Of these, $7,300 were sales on account and the remainder were cash sales.
4. Cash, collected in December 2017, but entered as received in January 2018 totaled $2,900. Of this amount, $2,646 was received on account after cash discounts of 2% had been deducted; the remainder was collected for cash sales.
5. Cash of $4,300 received in January 2018 was entered as received in December 2017. This cash represented the proceeds of a bank loan that matures in July 2018.
6. January 2018 cash disbursements entered as of December 2017 included payments of accounts payable in the amount of $8,200, on which a cash discount of 1% was taken.

(a1)

Calculate the following adjusted balances.

Cash

$enter a dollar amount

Accounts Receivable

$enter a dollar amount

Inventory

$enter a dollar amount

Accounts Payable

$enter a dollar amount

Notes Payable

 $enter a dollar amount

Unearned Revenue

 $enter a dollar amount

Solutions

Expert Solution

Cash:
Calculate the adjusted balance of cash as shown below:
Details Error Number Amount
Unadjusted cash balance 19100
Add: Cash received on account after cash discounts 4 2900
Add: Wrong posting of cash disbursement to accounts payable
(8200-(8200-1%) 6 8118
Total 30118
Less: Wrong posting of cash sales 3
11400-7300 4100
Less: Wrong posti, of receipt of cash representing proceeds of loan 5 4300
Adjusted balance of cash 21718
Thus. the adjusted balance of cash is 21718
Accounts Receivable:
Calculate the adjusted balance of accounts receivable as shown below:
Details Error Number Amount
Unadjusted accounts receivable balance 38200
Less: Wrong posting of credit sales 3 7300
Less: Receipt of cash on account after discount
2646*(100/(100-2)) 4 2700
Adjusted balance of accounts receivable 28200
Thus. the adjusted balance of accounts receivable is 28200
Inventory
Calculate the adjusted balance of Inventory as shown below:
Details Error Number Amount
Unadjusted inventory balance 61500
Less: Inventory received on consignment 2 1000
Adjusted Balance of inventory 60500
Thus, Adjusted Balance of inventory is 60500
Accounts Payable
Calculate the adjusted balance of Accounts Payable as shown below:
Details Error Number Amount
Unadjusted accounts Payable Balance 28400
Add: Purchase of inventory on account (2200-1000) 2 1200
Add: Wrong posting of cash disbursement to accounts payable 6 8200
Adjusted Balance of Accounts Payable 37800
Thus, Adjusted Balance of Accounts Payable is 37800
Notes Payable
Calculate the adjusted balance of Notes Payable as shown below:
Details Error Number Amount
Unadjusted notes Payable Balance 14000
Less: Wrong posting of receipt of cash representing proceeds of loan 5 4300
Adjusted Balance of Notes Payable 9700
Thus, Adjusted Balance of Notes Payable is 9700
Unearned Revenue
Calculate the adjusted balance of Unearned Revenue as shown below:
Details Error Number Amount
Unadjusted notes Unearned Revenue 2800
Add: Receipt of down payment for services to be performed 1 4700
Adjusted Balance of Unearned Revenue 7500
Thus, Adjusted Balance of Unearned Revenue is 7500

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ekkarill92 answered 1 year ago
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