In: Economics
In: Economics
Explain in details the various methods of delayed or advanced revenue recognition lisited below:
-Revenue Recognized during the Production Process
-Revenue Recognized at the Completion of Production
-Revenue Recognized as Services Are Performed
-Revenue Recognized as Cash Is Received
-Revenue Recognized on the Occurrence of Some Event
In: Accounting
Distinguish between Revenues and Estimated Revenue. Illustrate the budget entry for Estimated Revenue. Use this information to book the entry. The city approved the revenue budget for the following. Total Revenue $750,000 (Taxes $500,000 Inter government Revenue $125,000, and Licenses and permits of $125,000).
In: Accounting
Revenue and cash receipts journals; accounts receivable subsidiary and general ledgers
Transactions related to revenue and cash receipts completed by Crowne Business Services Co. during the period April 2–30 are as follows:
| Apr. 2. | Issued Invoice No. 793 to Ohr Co., $5,690. | |
| Apr. 5. | Received cash from Mendez Co. for the balance owed on its account. | |
| Apr. 6. | Issued Invoice No. 794 to Pinecrest Co., $2,050. | |
| Apr. 13. | Issued Invoice No. 795 to Shilo Co., $3,050. | |
| Post revenue and collections to the accounts receivable subsidiary ledger. | ||
| Apr. 15. | Received cash from Pinecrest Co. for the balance owed on April 1. | |
| Apr. 16. | Issued Invoice No. 796 to Pinecrest Co., $6,370. Post revenue and collections to the accounts receivable subsidiary ledger. |
|
| Apr. 19. | Received cash from Ohr Co. for the balance due on invoice of April 2. | |
| Apr. 20. | Received cash from Pinecrest Co. for balance due on invoice of April 6. | |
| Apr. 22. | Issued Invoice No. 797 to Mendez Co., $8,390. | |
| Apr. 25. | Received $2,320 note receivable in partial settlement of the balance due on the Shilo Co. account. | |
| Apr. 30. | Received cash from fees earned, $14,320. Post revenue and collections to the accounts receivable subsidiary ledger. |
Required:
1. Insert the following balances in the general ledger as of April 1:
| 11 | Cash | $13,030 |
| 12 | Accounts Receivable | 15,870 |
| 14 | Notes Receivable | 6,910 |
| 41 | Fees Earned | - |
After completing the recording of the transactions in the journals in part 3, total each of the columns of the special journals, and post the individual entries and totals to the general ledger. Insert account balances after the last posting. When posting to the general ledger, post in chronological order. However, if there is more than one entry on the same date, be sure to post transactions from the revenue journal before posting transactions from the cash receipts journal.
If an amount box does not require an entry, leave it blank. In CNOW, Journal pages begin with “J”, Cash Receipts begin with “CR” and Cash Receipts begins with “R”. For example journal/ Cash Receipts/ Cash Receipts, page 1/36/40 respectively. POST. REF. is simply J1, CR36, and R40.
| GENERAL LEDGER | ||||||
|---|---|---|---|---|---|---|
| Date | Item | Post. Ref. |
Debit | Credit | Balance Dr. | Balance Cr. |
| Account: Cash # 11 | ||||||
| Apr. 1 | Balance | ✔ | ||||
| Apr. 30 | ||||||
| Account: Accounts Receivable # 12 | ||||||
| Apr. 1 | Balance | ✔ | ||||
| Apr. 25 | ||||||
| Apr. 30 | ||||||
| Apr. 30 | ||||||
| Account: Notes Receivable # 14 | ||||||
| Apr. 1 | Balance | ✔ | ||||
| Apr. 25 | ||||||
| Account: Fees Earned # 41 | ||||||
| Apr. 30 | ||||||
| Apr. 30 | ||||||
2. Insert the following balances in the accounts receivable subsidiary ledger as of April 1:
| Mendez Co. | $9,120 |
| Ohr Co. | - |
| Pinecrest Co. | 6,750 |
| Shilo Co. | - |
After completing the recording of the transactions in the journals in part 3, post to the accounts receivable subsidiary ledger in chronological order, and insert the balances at the points indicated in the narrative of transactions. Determine the balance in the customer's account before recording a cash receipt. If an amount box does not require an entry, leave it blank. In CNOW, Journal pages begin with “J”, Cash Receipts begin with “CR” and Cash Receipts begins with “R”. For example journal/ Cash Receipts/ Cash Receipts, page 1/36/40 respectively. POST. REF. is simply J1, CR36, and R40.
| ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER | |||||
|---|---|---|---|---|---|
| Date | Item | Post. Ref. | Debit | Credit | Balance |
| Account: Mendez Co. | |||||
| Apr. 1 | Balance | ✔ | |||
| Account: Ohr Co. | |||||
| Account: Pinecrest Co. | |||||
| Apr. 1 | Balance | ✔ | |||
| Account: Shilo Co. | |||||
3. Prepare a single-column revenue journal (p. 40) and a cash receipts journal (p. 36). Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. The Fees Earned column is used to record cash fees.
4. Using the two special journals and the two-column general journal (p. 1), journalize the transactions for April. Post to the accounts receivable subsidiary ledger, and insert the balances at the points indicated in the narrative of transactions. Determine the balance in the customer’s account before recording a cash receipt.
5. Total each of the columns of the special journals and post the individual entries and totals to the general ledger. Insert account balances after the last posting.
If an amount box does not require an entry, leave it blank.
| REVENUE JOURNAL | PAGE 40 | |||
|---|---|---|---|---|
| Date | Invoice No. | Account Debited | Post. Ref. | Accounts Rec. Dr. Fees Earned Cr. |
| ✔ | ||||
| ✔ | ||||
| ✔ | ||||
| ✔ | ||||
| ✔ | ||||
| () () | ||||
| CASH RECEIPTS JOURNAL | PAGE 36 | ||||
|---|---|---|---|---|---|
| Date | Account Credited | Post. Ref. | Fees Earned Cr. | Accts. Rec. Cr. | Cash Dr. |
| ✔ | |||||
| ✔ | |||||
| ✔ | |||||
| ✔ | |||||
| ✔ | |||||
| () | () | () | |||
| JOURNAL | PAGE 1 | |||
|---|---|---|---|---|
| Date | Description | Post. Ref. | Debit | Credit |
6. What is the sum of the customer
balances?
$
Does the sum of the customer balances agree with the accounts
receivable controlling account in the general ledger?
7. Would an automated system omit postings to a controlling account as performed in step 5 for Accounts Receivable?
In: Accounting
Events Income Statement Balance Sheet While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustment relating to prepaid insurance. The failure to post the related adjusting entry will cause the following misstatements: While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustments relating to the depreciation of plant assets. The failure to post the related adjusting entry will cause the following misstatements: While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustment relating to unearned revenue. The failure to post the related adjusting entry will cause the following misstatements: While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustment relating to an accrued expense. The failure to post the related adjusting entry will cause the following misstatements: While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustment relating to an accrued revenue. The failure to post the related adjusting entry will cause the following misstatements: Slide 17 Slide 17 17of18
In: Accounting
Events Income Statement Balance Sheet While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustment relating to prepaid insurance. The failure to post the related adjusting entry will cause the following misstatements: While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustments relating to the depreciation of plant assets. The failure to post the related adjusting entry will cause the following misstatements: While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustment relating to unearned revenue. The failure to post the related adjusting entry will cause the following misstatements: While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustment relating to an accrued expense. The failure to post the related adjusting entry will cause the following misstatements: While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustment relating to an accrued revenue. The failure to post the related adjusting entry will cause the following misstatements: Slide 17 Slide 17
In: Accounting
The adjusted trial balance for Wisdom Company, as of December 31, 2019, is shown below: Wisdom Company Adjusted Trial Balance As at December 31, 2019 Dr Cr Accounts receivable 19,800 Machinery 44,800 Cash 22,600 Accumulated depreciation - Machinery Depreciation expense - Machinery 2,000 21,000 Rental expense 44,000 Salary expense 35,580 Electricity expense 2,400 Accounts payable 3,500 Notes payable 30,000 Interest payable 3,980 Share Capital 10,000 Retained earnings as at January 1, 2019 23,000 Marketing revenue Dividends 20,000 110,000 Supplies Unearned marketing revenue Supplies expense 35,000 1,250 28,250 Interest expense Required: 2,300 229,730 229,730
(a) Prepare the Income Statement of Wisdom Company for the year ended December 31, 2019. (b) Prepare the Statement of Retained Earnings of Wisdom Company for the year ended December 31, 2019. (c) Prepare the Statement of Financial Position of Wisdom Company as at December 31, 2019.
In: Accounting
CP8-4 Accounting for Accounts and Notes Receivable Transactions [LO 8-2, LO 8-3]
[The following information applies to the questions displayed below.]
|
Execusmart Consultants has provided business consulting services for several years. The company uses the percentage of credit sales method to estimate bad debts for internal monthly reporting purposes. At the end of each quarter, the company adjusts its records using the aging of accounts receivable method. The company entered into the following partial list of transactions. |
| a. |
During January, the company provided services for $300,000 on credit. |
| b. | On January 31, the company estimated bad debts using 1 percent of credit sales. |
| c. | On February 4, the company collected $150,000 of accounts receivable. |
| d. | On February 15, the company wrote off a $650 account receivable. |
| e. | During February, the company provided services for $250,000 on credit. |
| f. |
On February 28, the company estimated bad debts using 1 percent of credit sales. |
| g. |
On March 1, the company loaned $11,000 to an employee, who signed a 12% note due in 3 months. |
| h. | On March 15, the company collected $650 on the account written off one month earlier. |
| i. | On March 31, the company accrued interest earned on the note. |
| j. |
On March 31, the company adjusted for uncollectible accounts, based on the following aging analysis. Allowance for Doubtful Accounts has an unadjusted credit balance of $8,000. |
| Number of Days Unpaid | |||||||||||||||
| Customer | Total | 0–30 | 31–60 | 61–90 | Over 90 | ||||||||||
| Arrow Ergonomics | $ | 2,200 | $ | 900 | $ | 800 | $ | 500 | |||||||
| Asymmetry Architecture | 3,000 | $ | 3,000 | ||||||||||||
| Others (not shown to save space) | 97,100 | 37,100 | 49,000 | 6,000 | 5,000 | ||||||||||
| Weight Whittlers | 3,000 | 3,000 | |||||||||||||
| Total Accounts Receivable | $ | 105,300 | $ | 41,000 | $ | 49,800 | $ | 6,500 | $ | 8,000 | |||||
| Estimated Uncollectible (%) | 4 | % | 10 | % | 20 | % | 40 | % | |||||||
| 1. |
For items (a)–(j), analyze the amount and direction (+ or –) of effects on specific financial statement accounts and the overall accounting equation. TIP: In item (j), you must first calculate the desired ending balance before adjusting the Allowance for Doubtful Accounts. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.) |
|
| 2. |
Prepare the journal entries for items (a)–(j). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) |
| 3. |
Show how Accounts Receivable, Notes Receivable, and their related accounts would be reported in the current assets section of a classified balance sheet at the end of the quarter on March 31. |
| 4. |
Sales Revenue and Service Revenue are two income statement accounts that relate to Accounts Receivable. Name two other accounts related to Accounts Receivable and Note Receivable that would be reported on the income statement and indicate whether each would appear before, or after, Income from Operations for Execusmart Consultants. |
In: Accounting
Case
Azzahra is a book publisher, publishes and distributes educational and non-educational books and sell them to libraries and bookstores within Saudi Arabia and in the Arabian Gulf Region (AGR).
Azzahra employs a professional editorial team. All printing and binding activities are outsourced. The annual revenue total 250 millions Saudi Riyals which are disbursed as follows:
|
In millions |
Cash |
Credit |
Total |
Total Customers |
|
Within Saudi |
40 | 120 | 160 | 4680 |
|
From other AGR |
10 | 80 | 90 | 2120 |
|
Total |
50 | 200 | 250 | 7800 |
Cash expenditures are 150 million Saudi Riyals. Non-cash expenditures are 50 million Saudi Riyals. While revenues may be paid in different currencies, all processed out in the main center in Riyadh and using Saudi Riyal.
Requirement
Suppose you are a member of the professional editorial team and your task is to audit the revenue and accounts receivable. You probably would like to perform your audit in the following order:
1- Establish audit objectives
2- Determine the scope of the audit
3- Apply the Seven Habits of Highly Effective People (expected outcomes).
4- Understand the auditee (gather relevant information, analytical procedures, control
analysis, process flow, process risks)
5- Identify and assess risks
6- Identify key controls
7- Evaluate controls
8- Create test plan
9- Develop work program
10- Gather evidences
11- Evaluate evidences and reach conclusion
12- Develop observation and formulate recommendation.
In: Accounting