FINANCIAL ACCOUNTING

1. Grant Company gathered the following reconciling information in preparing its July bank reconciliation:

Cash balance per books, 7/31 $3,500

Deposits-in-transit 150

Notes receivable and interest collected by bank 850

Bank charge for check printing 20

Outstanding checks 2,000

NSF check 170

The adjusted cash balance per books on July 31 is $__________________.

2. A company has net credit sales of $800,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $1,000 prior to adjustment, its balance after adjustment will be a credit of $_________________

3. The Barnett Clinic purchased a new surgical laser for $64,000. The estimated salvage value is $4,000. The laser has a useful life of five years and the clinic expects to use it 10,000 hours. It was used 1,600 hours in year 1; 2,100 hours in year 2; 2,400 hours in year 3; 1,900 hours in year 4; 2,000 hours in year 5.

Instructions: Compute the annual depreciation for the first year under the units-of-activity method. $_________________

4. The corporate charter of Hunter Corporation allows the issuance of a maximum of 2,000,000 shares of $1 par value common stock. During its first three years of operation, Hunter issued 1,200,000 shares at $15 per share. It later acquired 25,000 of these shares as treasury stock for $25 per share.

Instructions: Based on the above information, answer the following questions:

(a) How many shares were issued? _______________________

(b) How many shares are outstanding? _______________________

(c) What is the balance of the Common Stock account? $______________________

(d) What is the balance of the Treasury Stock account? $______________________

5. Riley Company issued a $1,500,000, 10%, 10-year mortgage note payable to finance the construction of a building at December 31, 2016. The terms provide for semiannual installment payments of $120,365. When the note was issued the following general journal entry was made:

Cash................................................................................. 1,500,000

Mortgage Note Payable....................................................... 1,500,000

When the first installment payment of $120,365 was made, by how much was Mortage Note Payable reduced? $______________________

6. On January 1, Neely Corporation purchased a 30% equity in Poole Company for $120,000. At December 31, Poole declared and paid a $40,000 cash dividend and reported net income of $100,000. As of December 31, what is the balance of the Poole Company Investment on Neely's Balance Sheet?  $______________________

7. ABC Company uses the direct method for reporting its Statement of Cash Flows. The beginning balance in accounts receivable is $56,000, the ending balance is $50,000, and sales during the period are $142,000. What are cash receipts from customers? $______________________