E5-9B(Current Assets and Current Liabilities) The current assets and liabilities
ID: 2387367 • Letter: E
Question
E5-9B(Current Assets and Current Liabilities) The current assets and liabilities sections of the balance sheet of Cooper Company appear as follows.COOPER COMPANY, BALANCESHEET(PARTIAL), DECEMBER31, 2012.
Cash $100,000, Accounts receivable $222,500, Less: Allowance for doubtful accounts 17,500, 205,000, Inventories 427,500, Prepaid expenses 22,500, $755,000.
Accounts payables $152,500, Notes payables 167,500, $320,000.
The following errors in the corporation’s accounting have been discovered:
1. The inventory included $67,500 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $30,000 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30.
2. January 2013 cash disbursements entered as of December 2012 included payments of accounts payable in the amount of $97,500, on which a cash discount of 2% was taken.
3. Cash, not including cash sales, collected in January 2013 and entered as of December 31, 2012, totaled $88,310. Of this amount, $58,310 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan.
4. Sales for the first four days in January 2013 in the amount of $75,000 were entered in the sales book as of December 31, 2012. Of these, $53,750 were sales on account, and the remainder were cash sales.
Instructions:
(a) Restate the current assets and liabilities sections of the balance sheet in accordance with good ac-
counting practice. (Assume that both accounts receivable and accounts payable are recorded gross.)
(b) State the net effect of your adjustments on Cooper Company’s retained earnings balance.
Explanation / Answer
Please change your figures or use this as a guide. Let me know if you need further help
(a )
(b)
Working :
Current Assets :
Cash 31176 Accounts Receivable 105800 Inventories 144000
Current Liabilities :
Acccounts Payable 96000 Notes Payable 55000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.