Exercise 5-9

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, 2014
Cash				$ 41,670		Accounts payable		$ 66,030
Accounts receivable		$97,990				Notes payable		75,750
Less: Allowance for doubtful accounts		7,360		90,630				$141,780
Inventory				180,100
Prepaid expenses				9,860
				$322,260

The following errors in the corporations accounting have been discovered:

1.		January 2015 cash disbursements entered as of December 2014 included payments of accounts payable in the amount of $40,500, on which a cash discount of 2% was taken.
2.		The inventory included $31,300 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $10,100 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 2015 in the amount of $36,720 were entered in the sales journal as of December 31, 2014. Of these, $27,520 were sales on account and the remainder were cash sales.
4.		Cash, not including cash sales, collected in January 2015 and entered as of December 31, 2014, totaled $36,474. Of this amount, $26,264 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan.

	Your answer is partially correct. Try again.

Calculate the following adjusted balances.

Cash		$
Accounts Receivable		$
Inventory		$
Accounts Payable		$
Notes Payable		$

	Your answer is partially correct. Try again.

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.) (List Current Assets in order of liquidity.)

Allessandro Scarlatti Company Balance Sheet (Partial) December 31, 2014
Asset
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
			$
	$
Add Less:
Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity			$
Liabilities and Stockholders' Equity
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
			$
Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity			$

	Your answer is correct.

State the net effect of your adjustments on Allessandro Scarlatti Companys retained earnings balance.

IncreaseDecrease to retained earnings		$