For all problems you must use an Excel worksheet for the answers. Be sure to show all computations.

Problem #1

Based on an analysis of the financial statements, the following information is available for the Dun-Wrong Construction Company's cash flows for the year ended December 31, 210X.

1) Cash sales for the year were $1,250,000.
2) Credit sales for the year were $2,000,000. 75% of the credit sales were collected in the current year.
3) Last year's uncollectible accounts receivable were $35,000.
4) Accounts receivable decreased by $20,000.
5) Inventory increased by $10,000.
6) Accounts payable increased by $15,000.
7) Net income reported was $225,000.
8) Depreciation and amortization expenses reported were $75,000.
9) The book value of assets sold this year was $50,000. There was a $5,000 gain on the sale reported.
10) Cash payments to creditors, employees, etc. were $2,250,000.
11) The accrued expenses at year end were $10,000.
12) Income taxes accrued this year were $35,000.
13) Income taxes paid from last year's profits were $30,000.
14) Fixed assets purchased this year were $240,000. 50% of the purchase was made in cash.
15) Note receivable collections for the year were $25,000 for the principal and $3,000 for the interest.
16) Bonds were exchanged for land and a building. The fair market value of bonds was $500,000. Interest is paid on an annual rate of *%, but is paid semi-annual interest payment was made during the year.
17) Loan payments made to the bank were $50,000. This included interest in the amount of $4,500.
18) Dividends in the amount of $50,000 were declared on December 15th.
19) Dividends declared last year, but paid this year, was $25,000.

20) Cash and cash equivalents at the beginning of the year was $44,000.

Required: Prepare, in good form, a formal statement of cash flows, using the "Direct Method"

Problem #2

The bank statement for Steve's Service, Inc., as of June 30th, 201X, shows a balance of $54,780. The general ledger shows a balance of $68,757.

Other data"

1) Check #748 in the amount of $3,000 was originally recorded on the books for $4,500. The check was used to purchase office equipment.
2) A customer's note dated March 25th was discounted on April 12th. The note was dishonored by the bank on June 29th. The bank charged Steve's account $14,265, which included a service fee of $42.
3) The deposit of June 24th was recorded in the books in the amount of $2,895, but was corrected by the bank for the actual amount of $2,700. The difference was due to a book recording error on a customer's check which was received on account.
4) Checks outstanding at the end of June amounted to $9,885.
5) Bank service charges for the month were $210.
6) A customer's check, in the amount of $1,296, received from a "cash" sale was deposited on June 27th , but was returned by the bank on June 29th marked "NSF".
7) A deposit for $600 made on June 22nd, was credited by bank to another customer's account. Steve's Service properly recorded the deposit.
8) Receipts in the amount of $13,425 were recorded on June 30th, but not deposited into the account until July 1st.
9) A bank credit memo indicated that a customer had made an electronic funds transfer on June 29th to Steve's account in the amount of $4,629. Steve's did not record this deposit. The payment was on the customer's account.

1. Prepare, in good form, the bank reconciliation as of November 30th.
2. Prepare, in good form, the required adjusting journal entries.

Problem #3

The total outstanding accounts receivable for the Do-Right Corporation is $450,000 as of June 30th, 200X. An evaluation of the customers' accounts reflects an aging of the receivables as follows: Current - $260,000; 1 to 30 days overdue - $95,000; 31 to 60 days overdue - $50,000; 61 to 90 days overdue - $10,000; and over 90 days past due - $35,000. Past history of the uncollectible accounts resulted in the following percentages: Current - .5% (.005); 1 to 30 days overdue - 5%; 31 to 60 days overdue - 10%; 61 to 90 days overdue - 20%, and over 90 days overdue - 50%.

The trial balance, prior to the adjustment for this year's estimate, reflects a debit balance of $30,000 in the Allowance for Doubtful Accounts. Management considers anything over (under) +/- $10,000 a material amount.

Required:

1) Prepare, in good form, an aging schedule for June 30th.
2) Prepare the adjusting entry required at June 30th.
3) Do you think the amount at June 30th is inadequate (too low), or excessive (too high)? Explain.
4) If it is inadequate or excessive, how can management correct the problem?