Burton wants to purchase land owned by Kelly for use in his trade or business. Kelly's basis in the land is $150,000, and Burton has offered to pay $800,000 if she will sell within the next ten days. Kelly is interested in selling but wants to avoid gain recognition on the sale. Is there any way that Kelly could sell to Burton and still avoid gain recognition? The Le Company's bank statement for April 30 showed a cash balance of $5,719. The company's Cash account in its general ledger showed a $4,995 debit balance. Prepare the monthly bank reconciliation, incorporating the following information, also available as of April 30: a. A customer's check for $100 marked NSF was returned to Asia Company by the bank. In addition, the bank charged the company's account a $25 processing fee. b. The April 30 cash receipts totaling $1,313, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the April 30 bank statement. c. A $15 debit memorandum for checks printed by the bank was included with the canceled checks. d. Outstanding checks at April 30 included Check #1201, in the amount of $890; and Check #1204, in the amount of $350 e. A customer's note for $900 was collected by the bank. A collection fee of $25 was deducted by the bank and the difference was deposited in the account. f. Included with the canceled checks was a check for $275, drawn on another company, Asian Inc. g. A debit memorandum for $95.00 indicates the bank deducted the annual lock box fee for the company. h. On April 30, the bank issued a credit memorandum for $63 interest earned on Asian's account. i. When the April checks are compared with entries in the accounting records, it is found that Check No. 1207 had been correctly drawn for $1,041 to pay for the company's monthly insurance premiums but was erroneously entered in the accounting records as $1,410.
Burton wants to purchase land owned by Kelly for use in his trade or business. Kelly's basis in the land is $150,000, and Burton has offered to pay $800,000 if she will sell within the next ten days. Kelly is interested in selling but wants to avoid gain recognition on the sale. Is there any way that Kelly could sell to Burton and still avoid gain recognition? The Le Company's bank statement for April 30 showed a cash balance of $5,719. The company's Cash account in its general ledger showed a $4,995 debit balance. Prepare the monthly bank reconciliation, incorporating the following information, also available as of April 30: a. A customer's check for $100 marked NSF was returned to Asia Company by the bank. In addition, the bank charged the company's account a $25 processing fee. b. The April 30 cash receipts totaling $1,313, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the April 30 bank statement. c. A $15 debit memorandum for checks printed by the bank was included with the canceled checks. d. Outstanding checks at April 30 included Check #1201, in the amount of $890; and Check #1204, in the amount of $350 e. A customer's note for $900 was collected by the bank. A collection fee of $25 was deducted by the bank and the difference was deposited in the account. f. Included with the canceled checks was a check for $275, drawn on another company, Asian Inc. g. A debit memorandum for $95.00 indicates the bank deducted the annual lock box fee for the company. h. On April 30, the bank issued a credit memorandum for $63 interest earned on Asian's account. i. When the April checks are compared with entries in the accounting records, it is found that Check No. 1207 had been correctly drawn for $1,041 to pay for the company's monthly insurance premiums but was erroneously entered in the accounting records as $1,410.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Burton wants to purchase land owned by Kelly for use in his trade or business. Kelly's basis
in the land is $150,000, and Burton has offered to pay $800,000 if she will sell within the
next ten days. Kelly is interested in selling but wants to avoid gain recognition on the sale. Is
there any way that Kelly could sell to Burton and still avoid gain recognition?
The Le Company's bank statement for April 30 showed a cash balance of $5,719. The
company's Cash account in its general ledger showed a $4,995 debit balance.
Prepare the monthly bank reconciliation, incorporating the following information, also
available as of April 30:
a. A customer's check for $100 marked NSF was returned to Asia Company by the bank. In
addition, the bank charged the company's account a $25 processing fee.
b. The April 30 cash receipts totaling $1,313, were placed in the bank's night depository after
banking hours on that date and this amount did not appear on the April 30 bank statement.
c. A $15 debit memorandum for checks printed by the bank was included with the canceled
checks.
d. Outstanding checks at April 30 included Check #1201, in the amount of $890; and Check
#1204, in the amount of $350
e. A customer's note for $900 was collected by the bank. A collection fee of $25 was
deducted by the bank and the difference was deposited in the account.
f. Included with the canceled checks was a check for $275, drawn on another company,
Asian Inc.
g. A debit memorandum for $95.00 indicates the bank deducted the annual lock box fee for
the company.
h. On April 30, the bank issued a credit memorandum for $63 interest earned on Asian's
account.
i. When the April checks are compared with entries in the accounting records, it is found
that Check No. 1207 had been correctly drawn for $1,041 to pay for the company's monthly
insurance premiums but was erroneously entered in the accounting records as $1,410.
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