会计英语练习

ASSIGNMENT 2

PART ONE:

Using the following information to prepare a July 31 bank reconciliation statement and the resulting journal entries for the Simmons Company. The July 31 bank statement indicated a cash balance of $9610, while the cash ledger account on that date shows a balance of $7430.

a.Outstanding check totaled $2417.

b. A $500 check mailed to the bank for deposit had not reach the bank at the statement date.

c.The bank returned a customer’s NSF check for $225 received as payment of an account receivable.

d.The bank statement showed $30 interest earned on the bank balance for the month of July.

e.Check No. 781 for supplies cleared the bank for $268, but was erroneously recorded in our books as

$240.

f. A $486 deposit by Acme Company was erroneously credited to our account by the bank.

PART TWO:

Prepare general journal entries to record the following transactions of Anna Merchandising:

May. 1: Purchased merchandise on credit; terms 2/10, n/30; $5000, FOB shipping point.

2: Paid $300 cash for freight charges on the merchandise shipment of the previous transaction.

5: Sold merchandise on credit, terms 2/10, 1/15, n/30; $3500.

6: Received a $500 credit memo for merchandise purchased on May. 1 and returned for credit.

9: Paid for the merchandise purchased on May.1, less the return and the discount.

10: Issued a $300 credit memo to the customer who purchased merchandise on May.5 and returned a portion for credit.

17: Received payment for the merchandise sold on May.5, less the return and applicable discount.

17: Accepted a $ 1500, 60-day, 11% note dated May 15 in granting a time extension on the past-due account of Roger Bush.

June 8: Discounted the Roger Bush note at the bank at 13%

July 15: Received notice protesting the Roger Bush note. Paid the bank the maturity value of the note plus a $30 protest fee.

July 24：Received payment from Roger Bush of the maturity value of his dishonored note, the protest fee, and interest on both for 10 days beyond maturity at 12%.

TRANSLATION:

1.Inventory is merchandise purchased by merchandisers (retailers, wholesalers, distributors) for the purpose of being sold to customers. The cost of the merchandise purchased but not yet sold is reported in the account Inventory or Merchandise Inventory.Inventory is reported as a current asset on the company's balance sheet. Inventory is a significant asset that needs to be monitored closely. Too much inventory can result in cash flow problems, additional expenses (e.g., storage, insurance), and losses if the items become obsolete. Too little inventory can result in lost sales and lost customers.Because of the cost principle, inventory is reported on the balance sheet at the amount paid to obtain (purchase) the merchandise, not at its selling price.

Cost of goods sold is the cost of the merchandise that was sold to customers. The cost of goods sold is reported on the income statement when the sales revenues of the goods sold are reported.A retailer's cost of goods sold includes the cost from its supplier plus any additional costs necessary to get the merchandise into inventory and ready for sale. For example, let's assume that Corner Shelf Bookstore purchases a college textbook from a publisher. If Corner Shelf's cost from the publisher is $80 for the textbook plus $5 in shipping costs, Corner Shelf reports $85 in its Inventory account until the book is sold.

When the book is sold, the $85 is removed from inventory and is reported as cost of goods sold on the income statement.

Under Periodic inventory system the amount appearing in the Inventory account is not updated when purchases of merchandise are made from suppliers. Rather, the Inventory account is commonly updated or adjusted only once—at the end of the year. During the year the Inventory account will likely show only the cost of inventory at the end of the previous year.

Under Perpetual inventory system the Inventory account is continuously updated. The Inventory account is increased with the cost of merchandise purchased from suppliers and it is reduced by the cost of merchandise that has been sold to customers. (The Purchases account(s) do not exist.)

2.When a seller provides goods or services on credit, the resultant account receivable is normally considered to be an unsecured claim against the buyer's assets. This makes the seller (the supplier) an unsecured creditor, meaning it does not have a lien on any of the buyer's assets—not even on the goods that it just sold to the buyer.

Sometimes a supplier's customer gets into financial difficulty and is forced to liquidate its assets. In this situation the customer typically owes money to lending institutions as well as to its suppliers of goods and services. In such cases, it's the secured creditors (the banks and other lenders that have a lien on specific assets such as cash, receivables, inventory, equipment, etc.) who are paid first from the sale of the assets. Often there is not enough money to pay what is owed to the secured lenders, much less the unsecured creditors. In other words, the suppliers will never be paid what they are owed.

To avoid this kind of risk, some suppliers may decide not to sell anything on credit, but require instead that all of its goods be paid for with cash or a credit card. Such a company, however, may lose out on sales to competitors who offer to sell on credit.

To minimize losses, sellers typically perform a thorough credit check on any new customer before selling to them on credit. They obtain credit reports and check furnished references. Even when a credit check is favorable, however, a credit loss can still occur. For example, a first-rate customer may experience an unexpected financial hardship caused by one of its customers, something that could not have been known when the credit check was done. The point is this: any company that sells on credit to a large number of customers should assume that, sooner or later, it will probably experience some credit losses along the way.

DUE TIME:Dec 24th 2013