APPENDIX B PRACTICE WORK FOR STUDENT— SECOND HALF-YEAR (continued 2)

Charges:

Telegram $ 1.80

Collection charges (5 items) 1.17

Check of Central Wholesale Grocery Co. 80.79

Credits:

Interest on daily balance for December 8.18

The company had mailed to the bank a note, due December 31, payable to the National City Bank of New York and had taken credit for it in the sum of $10,000. The bank had not yet credited the item.

Prepare a reconciliation statement.

2. John Doe commenced business with a cash capital of $15,000. At the close of the first fiscal period the ledger accounts (except Cash and Capital) were: Accounts Receivable $4,312.50; Merchandise, debit balance $5,062.50; Accounts Payable $5,375; Expense $900. Doe’s net loss for the period was $2,775, and his sales were $50,000.

Prepare a statement of assets and liabilities and the profit or loss.

3. From the books of Messrs. Deas & Alexander, which are kept by single entry, the following balance sheet as at June 30, 19— was taken:

Assets Liabilities

Cash in Bank Accounts Payable $10,300.00

and on Hand $10,800.00 Capital Accounts:

Accounts Receivable 16,032.00 Deas $ 3,263

Inventories 29,980.00 Alexander 51,249 54,512.00

Buildings and Equipment 8,000.00

$64,812.00 $64,812.00

It was agreed that the partnership would be dissolved as at October 31 of the same year, but that Alexander would continue the business. It was further agreed that Deas would be paid the balance to his credit at June 30, 19—, together with a sum of $5,000 to cover his interest in the good-will of the business and his profit up to October 31, which latter was estimated at $1,200. From this amount, however, his drawings, amounting to $800, were to be deducted.

The following balances were shown on the books at June 30 of the next year: Cash in Bank and on Hand $8,310; Accounts Receivable $12,203; Inventories $29,143; Buildings and Equipment $8,103; Accounts Payable $8,706.

You ascertain that on April 30 of this year, merchandise valued in the books at $500 was destroyed by fire. As this loss was not covered by insurance, Mr. Alexander reduced the book value of his inventory to take care of the loss.

The additions to the buildings and equipment during the year cost $503, but the book value of these assets was reduced by the sum of $400 to take care of depreciation.

Alexanders personal drawings during the year amounted to $2,500.

You are instructed to prepare a balance sheet for Alexander as at June 30, 19—, a year after the balance sheet first given, together with statement showing profit or loss for the year and the distribution of same. You are also required to write up Alexander’s capital account for the year to June 30, 19—.

No value is to be placed on the good-will.

4. A machine costing $12,000 was estimated to have a life of twelve years with a residual value of $1,500. At the close of each year a charge of $875 was made to depreciation, and a like amount credited to “reserve” for depreciation. Just prior to closing the books at the end of the twelfth year the machine was discarded and sold for $2,000 (cash) and a similar machine was bought, costing $16,000. Show the journal entries you would frame to make the proper record.

5. What is the equated time for the payment of the balance of the following account (30 days to the month and 6% per annum)?

Henry M. Doremus

19— 19—

Mar. 16 Merchandise, 4 months $444.57 July 1 Cash $400.00

30 Merchandise, 60 days 376.82 20 Cash 375.00

Apr. 20 Merchandise, 30 days 712.19 Aug. 16 Cash 700.00

May 17 Merchandise, 4 months 628.75 30 Cash 600.00

28 Merchandise, 4 months 419.31

Henry M. Doremus desires to settle the above account on September 13, 19—. What amount of money shall he pay?