The current assets and current liabilities sections of the balance sheet of Keane Co. appear as follows. Cash $18,000 Accounts payable $28,000 Accounts receivable $39,000 Notes payable 14,000 Less: Allowance for doubtful accounts 2,000 37,000 Unearned revenue 3,000 Inventory 62,000 Total current liabilities $45,000 Prepaid expenses 6,000 Total current assets $123,000 The following errors in the corporation’s accounting have been discovered: 1. Keane collected $4,400 on December 20, 2017 as a down payment for services to be performed in January, 2018. The company’s controller recorded the amount as revenue. 2. The inventory amount reported included $3,200 of merchandise that had been received on December 31, 2017 but for which no purchase invoices had been received or entered. Of this amount, $1,800 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30. 3. Sales for the first day in January 2018 in the amount of $11,000 were entered in the sales journal as of December 31, 2017. Of these, $6,500 were sales on account and the remainder were cash sales. 4. Cash, collected in December 2017, but entered as received in January 2018 totaled $2,700. Of this amount, $2,450 was received on account after cash discounts of 2% had been deducted; the remainder was collected for cash sales. 5. Cash of $4,000 received in January 2018 was entered as received in December 2017. This cash represented the proceeds of a bank loan that matures in July 2018. 6. January 2018 cash disbursements entered as of December 2017 included payments of accounts payable in the amount of $6,700, on which a cash discount of 1% was taken. a) Calculate the following adjusted balances. Cash $enter a dollar amount Accounts Receivable $enter a dollar amount Inventory $enter a dollar amount Accounts Payable $enter a dollar amount Notes Payable $enter a dollar amount Unearned Revenue $enter a dollar amount b) State the net effect of your adjustments on Keane’s retained earnings balance.

The current assets and current liabilities sections of the balance sheet of Keane Co. appear as follows. Cash $18,000 Accounts payable $28,000 Accounts receivable $39,000 Notes payable 14,000 Less: Allowance for doubtful accounts 2,000 37,000 Unearned revenue 3,000 Inventory 62,000 Total current liabilities $45,000 Prepaid expenses 6,000 Total current assets $123,000 The following errors in the corporation’s accounting have been discovered: 1. Keane collected $4,400 on December 20, 2017 as a down payment for services to be performed in January, 2018. The company’s controller recorded the amount as revenue. 2. The inventory amount reported included $3,200 of merchandise that had been received on December 31, 2017 but for which no purchase invoices had been received or entered. Of this amount, $1,800 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30. 3. Sales for the first day in January 2018 in the amount of $11,000 were entered in the sales journal as of December 31, 2017. Of these, $6,500 were sales on account and the remainder were cash sales. 4. Cash, collected in December 2017, but entered as received in January 2018 totaled $2,700. Of this amount, $2,450 was received on account after cash discounts of 2% had been deducted; the remainder was collected for cash sales. 5. Cash of $4,000 received in January 2018 was entered as received in December 2017. This cash represented the proceeds of a bank loan that matures in July 2018. 6. January 2018 cash disbursements entered as of December 2017 included payments of accounts payable in the amount of $6,700, on which a cash discount of 1% was taken. a) Calculate the following adjusted balances. Cash $enter a dollar amount Accounts Receivable $enter a dollar amount Inventory $enter a dollar amount Accounts Payable $enter a dollar amount Notes Payable $enter a dollar amount Unearned Revenue $enter a dollar amount b) State the net effect of your adjustments on Keane’s retained earnings balance.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The current assets and current liabilities sections of the balance sheet of Keane Co. appear as follows.

Cash		$18,000	Accounts payable	$28,000
Accounts receivable	$39,000		Notes payable	14,000
Less: Allowance for doubtful accounts	2,000	37,000	Unearned revenue	3,000
Inventory		62,000	Total current liabilities	$45,000
Prepaid expenses		6,000
Total current assets		$123,000

The following errors in the corporation’s accounting have been discovered:

1.		Keane collected $4,400 on December 20, 2017 as a down payment for services to be performed in January, 2018. The company’s controller recorded the amount as revenue.
2.		The inventory amount reported included $3,200 of merchandise that had been received on December 31, 2017 but for which no purchase invoices had been received or entered. Of this amount, $1,800 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30.
3.		Sales for the first day in January 2018 in the amount of $11,000 were entered in the sales journal as of December 31, 2017. Of these, $6,500 were sales on account and the remainder were cash sales.
4.		Cash, collected in December 2017, but entered as received in January 2018 totaled $2,700. Of this amount, $2,450 was received on account after cash discounts of 2% had been deducted; the remainder was collected for cash sales.
5.		Cash of $4,000 received in January 2018 was entered as received in December 2017. This cash represented the proceeds of a bank loan that matures in July 2018.
6.		January 2018 cash disbursements entered as of December 2017 included payments of accounts payable in the amount of $6,700, on which a cash discount of 1% was taken.

a) Calculate the following adjusted balances.

Cash		$enter a dollar amount
Accounts Receivable		$enter a dollar amount
Inventory		$enter a dollar amount
Accounts Payable		$enter a dollar amount
Notes Payable		$enter a dollar amount
Unearned Revenue		$enter a dollar amount

b) State the net effect of your adjustments on Keane’s retained earnings balance.

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