Ashford acc 205 week 2 revenue and expenses


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Ashford acc 205 week 2 revenue and expenses

  1. 1. ASHFORD ACC 205 Week 2 Revenue and Expenses PLEASE DOWNLOAD HEREAssignments1. Due by Day 7. Revenue and Expenses. Please complete each of theexercises below in a word document. Save the document, and submit it in theappropriate week using the Assignment Submission button.1. Dave Morris began a law practice several years ago, shortly after graduatingfrom law school. During 19X1, he was approached by Delores Silva, who hadrecently suffered a back injury in an automobile accident. Morris accepted Silvaas a client, and in 19X2 proceeded with a lawsuit against Maddox Motors. Thesuit alleged that Maddox had knowingly sold Silva an automobile with defectivebrakes. Late in 19X2, the courts awarded Silva $240,000 in damages. Morris wasentitled to 40% of this settlement for his fees. In 19X3, Maddox Motors paid Silvaand Morris their respective shares of the judgment. Morris incurred secretarialand photocopy charges in 19X2 of $12,000— all related to the Silva case. Of thisamount, $8,000 was paid in 19X2 and the balance was paid in 19X3. Assumingthat Morris uses the accrual basis of accounting, in what year(s) should therevenue and expense amounts be recognized? Why?2. Accrual and modified cash basisThe following information pertains to Beta Company for October: Servicesrendered during October to customers on account$14,380Cash receipts fromOwner investment7,000Customers on account5,650Cash customers for services rendered in October6,800
  2. 2. Cash payments toCreditors for expenses incurred during October4,400Creditors for expenses incurred prior to October2,100Monroe Equipment for purchase of new machinery onOctober 18,400Expenses incurred during October, to be paid in futuremonths3,725a. Amounts paid on June 30 for a one-year insurance policy.b. Professional fees earned but not billed as of June 30.c. Repairs to the firms copy machine, incurred and paid in June.d. An advance payment from a client for a performance next month at aconvention.e. The payment in item (d) from the clients point of view.f. Interest owed on the companys bank loan, to be paid in early July.g. The bank loan payable in item (f).h. Office supplies on hand at year-end.i. Bank reconciliations: Missing amountsj. The following independent cases relate to bank reconciliations. Compute themissing amounts, assuming that no other reconciling items exist.Case ACase BCase C
  3. 3. Balance per bank $6,000$4,000$?Outstanding checks 5002,1001,400Deposits in transit 2,00071,000Balance per company records ?8,0004505. Bank reconciliation and entriesThe following information was taken from the accounting records of PalmettoCompany for the month of January: Balance per bank$6,150Balance per company records3,580Bank service charge for January20Deposits in transit940Interest on note collected by bank100Note collected by bank
  4. 4. 1,000NSF check returned by the bank with thebank statement650Outstanding checks3,080a. Prepare Palmettos January bank reconciliation.b. Prepare any necessary journal entries for Palmetto.6. Allowance method: Income statement and balance sheet approachesTempe Company reported accounts receivable of $300,000 and an allowance foruncollectible accounts of $31,000 (credit) on the December 31, 19X2, balancesheet. The following data pertain to 19X3 activities and operations: Sales onaccount$2,000,000Cashcollectionsfromcreditcustomers1,600,000Sales discounts50,000Sales returns & allowances100,000Uncollectible accounts written off29,000Collections on accounts that were previously written off2,700