Given: Cash$ 49,700Accounts payable$ 64,150Accounts receivable$92,600Notes payable63,370 Less: Allowance for doubtful accounts8,83083,770$127,520Inventory163,330Prepaid expenses8,580 $305,380
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 $41,400, on which a cash discount of 2% was taken.2.The inventory included $28,020 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $11,210 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 $28,760 were entered in the sales journal as of December 31, 2017. Of these, $19,360 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 $36,108. Of this amount, $24,108 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan.
State the net effect of your adjustments on Cheyenne Company’s retained earnings balance.
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