P7.1 (LO 1) Excel (Determine Proper Cash Balance) Francis Equipment Co. closes its books regularly on December 31, but at the end of 2020 it held its cash book open so that a more favorable balance sheet could be prepared for credit purposes. Cash receipts and disbursements for the first 10 days of January were recorded as December transactions. The information is given below. 1. January cash receipts recorded in the December cash book totaled $45,640, of which $28,000 represents cash sales, and $17,640 represents collections on account for which cash discounts of $360 were given. 2. January cash disbursements recorded in the December check register liquidated accounts payable of $22,450 on which discounts of $250 were taken. 3. The ledger has not been closed for 2020. 4. The amount shown as inventory was determined by physical count on December 31, 2020. The company uses the periodic method of inventory. Instructions a. Prepare any entries you consider necessary to correct Francis's accounts at December 31. b. To what extent was Francis Equipment Co. able to show a more favorable balance sheet at December 31 by holding its cash book open? (Compute working capital and the current ratio.) Assume that the balance sheet that was prepared by the company showed the following amounts: Dr. Cr. Cash $39,000 Accounts receivable 42,000 67,000 Inventory Accounts payable Other current liabilities $45,000 14,200
P7.1 (LO 1) Excel (Determine Proper Cash Balance) Francis Equipment Co. closes its books regularly on December 31, but at the end of 2020 it held its cash book open so that a more favorable balance sheet could be prepared for credit purposes. Cash receipts and disbursements for the first 10 days of January were recorded as December transactions. The information is given below. 1. January cash receipts recorded in the December cash book totaled $45,640, of which $28,000 represents cash sales, and $17,640 represents collections on account for which cash discounts of $360 were given. 2. January cash disbursements recorded in the December check register liquidated accounts payable of $22,450 on which discounts of $250 were taken. 3. The ledger has not been closed for 2020. 4. The amount shown as inventory was determined by physical count on December 31, 2020. The company uses the periodic method of inventory. Instructions a. Prepare any entries you consider necessary to correct Francis's accounts at December 31. b. To what extent was Francis Equipment Co. able to show a more favorable balance sheet at December 31 by holding its cash book open? (Compute working capital and the current ratio.) Assume that the balance sheet that was prepared by the company showed the following amounts: Dr. Cr. Cash $39,000 Accounts receivable 42,000 67,000 Inventory Accounts payable Other current liabilities $45,000 14,200
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Good night
Transcribed Image Text:P7.1 (LO 1) Excel (Determine Proper Cash Balance) Francis Equipment Co. closes its books regularly on December 31, but at
the end of 2020 it held its cash book open so that a more favorable balance sheet could be prepared for credit purposes. Cash receipts
and disbursements for the first 10 days of January were recorded as December transactions. The information is given below.
1. January cash receipts recorded in the December cash book totaled $45,640, of which $28,000 represents cash sales, and
$17,640 represents collections on account for which cash discounts of $360 were given.
2. January cash disbursements recorded in the December check register liquidated accounts payable of $22,450 on which
discounts of $250 were taken.
3. The ledger has not been closed for 2020.
4. The amount shown as inventory was determined by physical count on December 31, 2020.
The company uses the periodic method of inventory.
Instructions
a. Prepare any entries you consider necessary to correct Francis's accounts at December 31.
b. To what extent was Francis Equipment Co. able to show a more favorable balance sheet at December 31 by holding its cash book
open? (Compute working capital and the current ratio.) Assume that the balance sheet that was prepared by the company
showed the following amounts:
Dr.
Cr.
Cash
$39,000
Accounts receivable
42,000
67,000
Inventory
Accounts payable
Other current liabilities
$45,000
14,200
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education