Reference no: EM131594874
Q1. The petty cash fund of Western Glass Company contained the following items on November 30, 2011:
Currency and coins $ 23
Receipts for the following expenditures
Delivery charges $42
Office supplies 50
Restaurant receipt for entertaining a customer 110 202
An I.O.U. from an employee 25
Total $250
The petty cash fund was established on November 1, 2011, with a transfer of $250 from cash to the petty cash account.
Required: Prepare the journal entries to establish the petty cash account and to replenish the fund at the end of November.
Q2. The Fitzgerald Company maintains a checking account at the Bank of the North. The bank provides a bank statement along with canceled checks on the last day of each month. The October 31, 2011 bank statement included the following information:
Balance, October 1, 2011 $ 32,690
Deposits 86,000
Checks processed (75,200)
Service charges (350)
NSF checks (1,600)
Monthly loan payments deducted directly by bank from account (includes $400 in interest) (3,400)
Balance October 31, 2011 $38,140
The company's general ledger cash (checking) account had a balance of $42,544 at the end of October.
Deposits outstanding totaled $4,224 and all checks written by the company were processed by the bank except for those totaling $5,620.
In addition, a check for $500 for the purchase of office furniture was incorrectly recorded by the company as a $50 disbursement. The bank correctly processed the check during October.
Required:
a. Prepare a bank reconciliation for the month of October.
b. Prepare the necessary journal entries at the end of October to adjust the general ledger cash account?
Q3. On January 1, 2011, American Corporation purchased 25% of the outstanding voting shares of Short Supplies common stock for $210,000 cash. On that date, Short's book value and fair value were both $840,000. The equity method is deemed appropriate for this investment.
Short's net income reported on December 31, 2011, was $80,000. During 2011, Short also paid cash dividends in the amount of $24,000.
Required: Prepare the journal entries necessary to record the above information on American Corporation's books during 2011.
Q4. On January 1, 2011, Field Company purchased 12% bonds, dated January 1, 2011, with a face amount of $20 million. The bonds mature in 2020 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31.
Required:
a. Determine the price of the bonds at January 1, 2011.
b. Prepare the journal entry to record the bond purchase by Field on January 1, 2011.
c. Prepare the journal entry to record interest on June 30, 2011, using the straight-line method.
d. Prepare the journal entry to record interest on December 31, 2011, using the straight-line method.