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P7-1 (Determine Proper Cash Balance) Francis Equipment Co. closes its
books regularly on December 31, but at the end of 2014 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 2014.
4. The amount shown as inventory was determined by physical count on
December 31, 2014. The company uses the periodic method of inventory.
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ACC 537 Week 2 E8-21 LIFO Effect
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