Question

Can you help with this on excel? I am trying to figure out the actual calculations.

For each item above, indicate the dollar amounts to be reported as a current liability and as a long-term liability, if any.

E5-9 (L02,3) (Current Assets and Current Liabilities) The current assets and current liabilities sections of the balance sheet

of Allessandro Scarlatti Company appear as follows.

ALLESSANDRO SCARLATTI COMPANY

BALANCE SHEET (PARTIAL)

DECEMBER 31, 2017

Cash $ 40,000 Accounts payable $ 61,000

Accounts receivable $89,000 Notes payable 67,000

Less: Allowance for $128,000

doubtful accounts 7,000    82,000

Inventory 171,000

Prepaid expenses 9,000

$302,000

The following errors in the corporation’s accounting have been discovered:

1. January 2018 cash disbursements entered as of December 2017 included payments of accounts payable in the amount of

$39,000, on which a cash discount of 2% was taken.

2. The inventory included $27,000 of merchandise that had been received at December 31 but for which no purchase invoices

had been received or entered. Of this amount, $12,000 had been received on consignment; the remainder was purchased

f.o.b. destination, terms 2/10, n/30.

3. Sales for the first four days in January 2018 in the amount of $30,000 were entered in the sales journal as of December 31,

2017. Of these, $21,500 were sales on account and the remainder were cash sales.

4. Cash, not including cash sales, collected in January 2018 and entered as of December 31, 2017, totaled $35,324. Of this

amount, $23,324 was received on account after cash discounts of 2% had been deducted; the remainder represented the

proceeds of a bank loan.

Instructions

(a) Restate the current assets and current liabilities sections of the balance sheet in accordance with good accounting

practice. (Assume that both accounts receivable and accounts payable are recorded gross.)

(b) State the net effect of your adjustments on Allessandro Scarlatti Company’s retained earnings balance.

Answer 1

a	Allesandro Scarlatti Company
	Partial Balance Sheet
	As of December 2018
		$	$
	Current Asset
	Cash( W/Note-1)		$34,396.00
	Account Receivable (W/ote-2)	$91,300.00
	Allowance for doubtful account	-$7,000.00	$84,300.00
	Inventories( W/Note-3)		$1,59,000.00
	Prepaid expense		$9,000.00
	Total current Assets		$2,86,696.00
	Current Liabilities
	Accounts payable a (W/N-4)		$85,000.00
	Notes payable (w/n-5)		$55,000.00
	Total current Liabilities		$1,40,000.00
b	Adjustment to retained earnings statement
		$	$
	January sales discounts($39000/.98*0.02)		$795.92
	January sales	$30,000.00
	January purchase discount($39000*0.02)	$780.00
	December purchase ($27000-$12000)	$15,000.00
	consignment inventory	$12,000.00	$57,780.00
	Change (decrease) to retained earnings		$58,575.92

Working Note-1	$
Cash Balance	$40,000.00
Cash disbursement after discount(39000*98%)	$38,220.00
	$78,220.00
Cash sale in january($30000-$21500)	-$8,500.00
Cash collected on account	-$23,324.00	$39,226.00
Bank loan proceeds	-$12,000.00
Adjusted cash*	34396
Working Note-2	$
Account Receivable balance	$89,000.00
Accounts reduced from january collection($23324/.98)	$23,800.00
	$1,12,800.00
Account receivable in January	-$21,500.00
Adjusted accounts receivable**	91300
Working Note-3	$
Inventories	$1,71,000.00
Inventories received on consignment	-$12,000.00
Adjustment to inventory***	$1,59,000.00
Working Note-4	$	$
Accounts Payable		$61,000.00
Cash disbursement	$39,000.00
Purchase invoice ommitted($27,000-$12000)	-$15,000.00	$24,000.00
Adjusted account payable		$85,000.00
Working Note-5	$
Notes Payable	$67,000.00
Proceeds of bank loan	-$12,000.00
Adjusted notes payable	$55,000.00