ALLESSANDRO SCARLATTI COMPANY BALANCE SHEET (PARTIAL) DECEMBER 31, 2014 (a1) Cas

Question

ALLESSANDRO SCARLATTI COMPANY
BALANCE SHEET (PARTIAL)
DECEMBER 31, 2014

(a1)

Cash

Accounts Receivable

Inventory

Accounts Payable

Notes Payable

The current assets and current liabilities sections of the balance sheet of Allessandro Scarlatti Company appear as follows.

ALLESSANDRO SCARLATTI COMPANY
BALANCE SHEET (PARTIAL)
DECEMBER 31, 2014

Cash $ 46,770 Accounts payable $  68,320 Accounts receivable $98,790 Notes payable 67,080     Less: Allowance for doubtful accounts 8,950 89,840 $135,400 Inventory 175,770 Prepaid expenses 9,310 $321,690
The following errors in the corporation’s accounting have been discovered:
1. January 2015 cash disbursements entered as of December 2014 included payments of accounts payable in the amount of $40,500, on which a cash discount of 2% was taken. 2. The inventory included $27,500 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $12,900 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30. 3. Sales for the first four days in January 2015 in the amount of $33,690 were entered in the sales journal as of December 31, 2014. Of these, $30,070 were sales on account and the remainder were cash sales. 4. Cash, not including cash sales, collected in January 2015 and entered as of December 31, 2014, totaled $38,052. Of this amount, $27,342 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan.

Explanation / Answer

Adjusted Balance on 31.12.2014 Cash 45598 Accounts Receivables 96620 Less : allowance for bad debts 8950 87670 Inventory 148270 Accounts Payable 108820 Notes Payable 56370 Cash A/c Particulars Amt Particulars Amt To Balance 46770 By Cash Sales (Jan-15) 3620 To Accounts Payable (Jan-15) 40500 By Accounts receivables (Jan-15) 27342 By Loan recd (Jan-15) 10710 By Balance (Bal Fig) 45598 87270 87270 Accounts Receivables Particulars Amt Particulars Amt To Balance 98790 By Balance 8950 To Cash recd (Jan-15) 27342 By Sales (Jan-15) 30070 To Cash Discounts 558 (27342 / 98 X 2) To Balance 8950 Balance (Bal fig) 96620 135640 135640 Inventory Particulars Amt Particulars Amt To Balance 175770 By Purchases (Jan-15) 27500 By Balance (Bal Fig) 148270 175770 175770 Accounts Payable A/c Particulars Amt Particulars Amt To Balance (Bal Fig) 108820 By Balance 68320 By Cash A/c (Jan-15) 40500 108820 108820 Notes Payable A/c Particulars Amt Particulars Amt To Cash (Jan -15) 10710 By Balance 67080 To Balance (Bal Fig) 56370 67080 67080

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