The adjusted trial balance of Fargo Company as of July 31, 2016 is presented bel

Question

The adjusted trial balance of Fargo Company as of July 31, 2016 is presented below. (Read that again, think about what that means about where Fargo is in the accounting cycle.) Notice that the total debits and credits for each account are indicated (including the beginning balances) rather than the usual account balance. For example, the cash account had transactions which resulted in a total of $67,700 debits (including the beginning balance) and a total of $55,400 credits. All adjusting entries have been made for the month??uly 2016, except the adjustment for inventory Fargo's fiscal year end is June 30 Debit Account Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Prepaid Advertising Office Supplies on Hand Office Equipment Accumulated Depreciation Accounts Payable Salaries Payable Interest Payable Dividends Payable Notes Payable Common Stock Paid-In Capital in Excess of Par Retained Earnings Dividends Declared Sales Sales Returns Sales Discounts Purchases Purchase Returns and Allowances Purchase Discounts Salaries Expense Office Supplies Expense Insurance Expense Advertising Expense Bad Debt Expense Miscellaneous Expense Depreciation Expense Interest Expense Gain on Sale of Office Equipment Totals Credit S67,700$55,400 54.400 1.100 58,000 700 60,000 1,200 1.700 22,000 400 31,900 400 1.300 ,500 7.600 40,000 800 100 8.200 30,000 12,600 20,000 19,900 4,000 7,200 61,000 2,200 500 42,000 900 400 9,200 1,300 700 600 500 400 300 300 200 S315.800 S315,800

Explanation / Answer

Solution 2:

Accounts receivables written off during the month = Debit to allowance for doubtful accounts = $700

Solution 3:

Ending balane of accounts receivables = $58000 - $54,400 = $3,600

Ending balance of allowance for doubtful accounts = $1,100 - $700 = $400

Net realizable value of accounts receivables at the end of July = $3,600 - $400 = $3,200

Solution 4:

Cash received on sale of office equipment = Credit to office equipment - Debit to accumulated depreciation + Gain on sale of office equipment

= $1,500 - $400 + $200 = $1,300

Solution 5:

Depreciation expense on office equipment during July = $300

Annual depreciation on office equipment neither purchased nor sold during the month = $300*12 = $3,600

Original cost of equipment neither purchased nor sold = $3,600*5 = $18,000

Original cost of office equipment sold = $1,500

Equipment acquired during july = $22,000 - $18,000 - $1,500 = $2,500

Solution 6:

Accumulated depreciation on equipment neither sold nor acquired = $7,600 - $400 = $7,200

Depreciation per month = $300

Life of equipment already consumed that is neither acquired nor sold = $7,200 / $300 = 24 months

Solution 7:

Payment made to accounts payable during the month = Debit to accounts payable - Credit to purchase returns and allowances

= $31,900 - $900 = $31,000

It is assumed that puchase discount are related to cash purchases and purchase return and allowances are related to credit purchases.

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