Accounting theory and practice, Volume 1 (of 3)

by Roy B. Kester

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?

APPENDIX C
MISCELLANEOUS PROBLEMS FOR
SUPPLEMENTARY WORK

Controlling Accounts

1. From the following data prepare controlling accounts. Indicate beside each entry its source book. Balance and close the accounts.

• Sales $10,000.
• Purchases returns and allowances $200.
• Credit given customers for cash received $5,000.
• Purchases $16,000.
• Sales discount $180.
• Notes payable issued to creditors $8,000.
• Customers’ notes dishonored $100.
• Credit received for cash paid to creditors $4,000.
• Notes received from customers $1,000.
• Purchase discount $80.
• Bad accounts charged off $100.
• Freight prepaid on sales $60.