Com Prob 2 
COMPREHENSIVE PROBLEM 2
Music-Is-Us
A mini-practice set illustrating numerous aspects of the accounting cycle for a merchandising business organized as a corporation. Students are expected to:
(1) prepare a bank reconciliation, (2) make adjusting entries—including adjustments related to marketable securities, uncollectible accounts, inventory shrinkage, and depreciation, (3) prepare an income statement, a statement of retained earnings, and a balance sheet, and (4) assess the financial condition of the business from a short-term creditor’s perspective.
2 to 3 hours
Strong
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2 to 3 hours, Strong
COMPREHENSIVE PROBLEM 2
MUSIC-IS-US
a.
MUSIC-IS-US
Bank Reconciliation
December 31, 2015
Balance per bank statement, December 31, 2015
Add: Deposits in transit not recorded by bank
Deduct: Outstanding checks
No. 508
No. 511
No. 521
Adjusted cash balance
$
$
Balance per depositor 's records, December 31, 2015
Deduct:
Bank service charge
NSF check from Iggy Smarts
Adjusted cash balance (as above)
$
$
46,975
16,500
63,475
$
21,000
42,475
$
45,000
$
2,525
42,475
5,500
7,500
8,000
25
2,500
General Journal
a.
b.
c.
d.
e.
Bank Service Charges
Accounts Receivable
Cash
To record bank service charges for December and the NSF check received from Iggy Bates.
25
2,500
Marketable Securities
Unrealized Holding Gain on Investments
To increase reported value of marketable securities from $25,000 to $27,500. (Note: the portfolio was previously increased from $19,000 to $25,000.)
2,500
Uncollectible Accounts Expense
Allowance for Doubtful Accounts
To record uncollectible accounts expense for
December.
3,500
Cost of Goods Sold
Inventory
To record inventory shrinkage of missing guitars.
1,350
Office Supplies Expense
Office Supplies
To record office supplies used in December.
2,525
2,500
3,500
1,350
300
Music-Is-Us
A mini-practice set illustrating numerous aspects of the accounting cycle for a merchandising business organized as a corporation. Students are expected to:
(1) prepare a bank reconciliation, (2) make adjusting entries—including adjustments related to marketable securities, uncollectible accounts, inventory shrinkage, and depreciation, (3) prepare an income statement, a statement of retained earnings, and a balance sheet, and (4) assess the financial condition of the business from a short-term creditor’s perspective.
2 to 3 hours
Strong
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2 to 3 hours, Strong
COMPREHENSIVE PROBLEM 2
MUSIC-IS-US
a.
MUSIC-IS-US
Bank Reconciliation
December 31, 2015
Balance per bank statement, December 31, 2015
Add: Deposits in transit not recorded by bank
Deduct: Outstanding checks
No. 508
No. 511
No. 521
Adjusted cash balance
$
$
Balance per depositor 's records, December 31, 2015
Deduct:
Bank service charge
NSF check from Iggy Smarts
Adjusted cash balance (as above)
$
$
46,975
16,500
63,475
$
21,000
42,475
$
45,000
$
2,525
42,475
5,500
7,500
8,000
25
2,500
General Journal
a.
b.
c.
d.
e.
Bank Service Charges
Accounts Receivable
Cash
To record bank service charges for December and the NSF check received from Iggy Bates.
25
2,500
Marketable Securities
Unrealized Holding Gain on Investments
To increase reported value of marketable securities from $25,000 to $27,500. (Note: the portfolio was previously increased from $19,000 to $25,000.)
2,500
Uncollectible Accounts Expense
Allowance for Doubtful Accounts
To record uncollectible accounts expense for
December.
3,500
Cost of Goods Sold
Inventory
To record inventory shrinkage of missing guitars.
1,350
Office Supplies Expense
Office Supplies
To record office supplies used in December.
2,525
2,500
3,500
1,350
300