Chapter. 11-1As in many ethics issues, there is no one right answer. The local newspaper reported on this issue in these terms: "The company covered up the first report, and the local newspaper uncovered the company's secret. The company was forced to not locate here (CollierCounty). It became patently clear that doing the least that is legally allowed is not enough."1-21. B2. B3. E4. F5. B6. F7. X 8. E 9. X 10. B1-3a. $96,500 ($25,000 + $71,500)b. $67,750 ($82,750 – $15,000)c. $19,500 ($37,000 – $17,500)1-4a. $275,000 ($475,000 – $200,000)b. $310,000 ($275,000 + $75,000 – $40,000)c. $233,000 ($275,000 – $15,000 – $27,000)d. $465,000 ($275,000 + $125,000 + $65,000)e. Net income: $45,000 ($425,000 – $105,000 – $275,000) 1-5a. owner's equityb.liabilityc.assetd.assete.owner'sequity f.asset1-6a. Increases assets and increases owner’s equity.b. Increases assets and increases owner’s equity.c. Decreases assets and decreases owner’s equity.d. Increases assets and increases liabilities.e. Increases assets and decreases assets.1-71. increase2. decrease3.increase4.decrease1-8a. (1) Sale of catering services for cash, $25,000.(2) Purchase of land for cash, $10,000.(3) Payment of expenses, $16,000.(4) Purchase of supplies on account, $800.(5) Withdrawal of cash by owner, $2,000.(6) Payment of cash to creditors, $10,600.(7) Recognition of cost of supplies used, $1,400.b. $13,600 ($18,000 – $4,400)c. $5,600 ($64,100 – $58,500)d. $7,600 ($25,000 – $16,000 – $1,400)e. $5,600 ($7,600 – $2,000)1-9It would be incorrect to say that the business had incurred a net loss of $21,750. The excess of the withdrawals over the net income for the period is a decrease in the amount of owner’s equity in the business.1-10Balance sheet items: 1, 3, 4, 8, 9, 101-11Income statement items: 2, 5, 6, 71-12MADRAS COMPANYStatement of Owner’s EquityFor the Month Ended April 30, 2006Leo Perkins, capital, April 1, 2006 $297,200 Net income for the month ........... $73,000Less withdrawals ................... 12,000Increase in owner’s equity........ 61,000Leo Perkins, capital, April 30, 2006 $358,2001-13HERCULES SERVICESIncome StatementFor the Month Ended November 30, 2006Fees earned ........................ $232,120 Operating expenses:Wages expense .................... $100,100Rent expense ..................... 35,000Supplies expense ................. 4,550Miscellaneous expense ............. 3,150Total operating expenses ........ 142,800 Net income ......................... $89,3201-14Balance sheet: b, c, e, f, h, i, j, l, m, n, oIncome statement: a, d, g, k1-151. b–investing activity2.a–operating activity3. c–financing activity4.a–operating activity1-16a. 2003: $10,209 ($30,011 – $19,802)2002: $8,312 ($26,394 – $18,082)b. 2003: 0.52 ($10,209 ÷ $19,802)2002: 0.46 ($8,312 ÷ $18,082)c. The ratio of liabil ities to stockholders’ equityincreased from 2002 to 2003, indicating an increase in risk for creditors. However, the assets of The Home Depot are more than sufficient to satisfy creditor claims.Chapter. 22-1AccountAccount NumberAccounts Payable 21Accounts Receivable 12Cash 11Corey Krum, Capital 31Corey Krum, Drawing 32Fees Earned 41Land 13Miscellaneous Expense 53Supplies Expense 52Wages Expense 512-2Balance Sheet Accounts Income Statement Accounts1. Assets11 Cash12 AccountsReceivable13 Supplies14 Prepaid Insurance15Equipment2. Liabilities21 Accounts Payable22Unearned Rent3. Owner's Equity31 Millard Fillmore,Capital32 Millard Fillmore,Drawing4. Revenue41Fees Earned5. Expenses51 Wages Expense52 Rent Expense53 Supplies Expense59 MiscellaneousExpense2-3a. andb.Account Debited Account CreditedTransaction Type EffectT ype Effect(1) asset + owner's equity+(2) asset + asset –(3) asset + asset –liability +(4) expense + asset –(5) asset + revenue +(6) liability –asset –(7) asset + asset –(8) drawing + asset –(9) expense + asset –Ex. 2–4(1) Cash ........................... 40,000Ira Janke, Capital ........... 40,000 (2) Supplies ....................... 1,800Cash ......................... 1,800 (3) Equipment ...................... 24,000Accounts Payable ............. 15,000Cash ......................... 9,000 (4) Operating Expenses.............. 3,050Cash ......................... 3,050 (5) Accounts Receivable ............. 12,000Service Revenue .............. 12,000 (6) Accounts Payable ............... 7,500Cash ......................... 7,500 (7) Cash ........................... 9,500Accounts Receivable .......... 9,500 (8) Ira Janke, Drawing.............. 5,000Cash ......................... 5,000 (9) Operating Expenses.............. 1,050Supplies ..................... 1,0502-51. debit and credit (c)2. debit and credit (c)3. debit and credit (c)4. credit only (b)5. debit only (a)6. debit only (a)7. debit only (a)2-6a. Liability—credit f. Revenue—creditb. Asset—debit g. Asset—debitc. Asset—debit h. Expense—debitd. Owner's equity i. Asset—debit(Cindy Yost, Capital)—credit j.E xpense—debite. Owner's equity(Cindy Yost, Drawing)—debit2-7a. credit g. debitb. credit h. debitc. debit i. debitd. credit j. credite. debit k. debitf. credit l. credit2-8a. Debit (negative) balance of $1,500 ($10,500 –$4,000 – $8,000). Such a negative balance means that the liabilities of Seth’s business exceed the assets.b. Y es. The balance sheet prepared at December 31will balance, with Seth Fite, Capital, being reported in the owner’s equity section as a negative $1,500.2-9a. The increase of $28,750 in the cash account doesnot indicate earnings of that amount. Earnings will represent the net change in all assets and liabilities from operating transactions.b. $7,550 ($36,300 – $28,750)2-10a. $40,550 ($7,850 + $41,850 – $9,150)b. $63,000 ($61,000 + $17,500 – $15,500)c. $20,800 ($40,500 – $57,700 + $38,000)2-112005Aug.1 Rent Expense ................... 1,500Cash ......................... 1,5002 Advertising Expense (700)Cash (700)4 Supplies ....................... 1,050Cash ......................... 1,0506 Office Equipment ............... 7,500Accounts Payable ............. 7,5008 Cash ........................... 3,600Accounts Receivable .......... 3,60012 Accounts Payable ............... 1,150Cash ......................... 1,15020 Gayle McCall, Drawing ........... 1,000Cash ......................... 1,00025 Miscellaneous Expense (500)Cash (500)30 Utilities Expense (195)Cash (195)31 Accounts Receivable ............. 10,150Fees Earned .................. 10,15031 Utilities Expense (380)Cash (380)2-12a.JOURNAL Page 43Post.Date Description Ref. Debit Credit 2006Oct.27 Supplies................... 15 1,320Accounts Payable ......... 21 1,320Purchased supplies on account.b.,c.,d.Supplies 15Post.BalanceDate Item Ref. Dr. Cr.Dr. Cr.2006Oct. 1 Balance............ .... .... 585 ....27 .................. 43 1,320 .... 1,905 .... Accounts Payable 21 2006Oct. 1 Balance............ .... .... .... 6,15027 .................. 43 .... 1,320 .... 7,470 2-13Inequality of trial balance totals would be caused byerrors described in (b) and (d).2-14ESCALADE CO.Trial BalanceDecember 31, 2006Cash ......................... 13,375Accounts Receivable ................... 24,600Prepaid Insurance ..................... 8,000 Equipment ............................. 75,000 Accounts Payable ...................... 11,180 Unearned Rent ......................... 4,250 Erin Capelli, Capital ................. 82,420 Erin Capelli, Drawing ................. 10,000Service Revenue ....................... 83,750 Wages Expense ......................... 42,000 Advertising Expense ................... 7,200 Miscellaneous Expense ................. 1,425181,600181,6002-15a. Gerald Owen, Drawing ............ 15,000Wages Expense ................ 15,000b. Prepaid Rent ................... 4,500Cash ........................... 4,5002-16题目的资料不全, 答案略.2-17a. KMART CORPORATIONIncome StatementFor the Years Ending January 31, 2000 and 1999(in millions)Increase (Decrease)2000 1999AmountPercent1. Sales ................... $37,028 $35,925 $1,103 3.1%2. Cost of sales ........... (29,658)(28,111) .................. 1,5475.5%3. Selling, general, and admin.expenses ................ (7,415) (6,514) 901 13.8%4. Operating income (loss)before taxes ............ $ (45) $1,300$(1,345)(103.5%)b. The horizontal analysis of Kmart Corporationreveals deteriorating operating results from 1999 to 2000. While sales increased by $1,103 million,a 3.1% increase, cost of sales increased by $1,547million, a 5.5% increase. Selling, general, and administrative expenses also increased by $901 million, a 13.8% increase. The end result was that operating income decreased by $1,345 million, overa 100% decrease, and created a $45 million loss in2000. Little over a year later, Kmart filed for bankruptcy protection. It has now emerged from bankruptcy, hoping to return to profitability.3-11. Accrued expense (accrued liability)2. Deferred expense (prepaid expense)3. Deferred revenue (unearned revenue)4. Accrued revenue (accrued asset)5. Accrued expense (accrued liability)6. Accrued expense (accrued liability)7. Deferred expense (prepaid expense)8. Deferred revenue (unearned revenue)3-2Supplies Expense (801)Supplies (801)3-3$1,067 ($118 + $949)3-4a. Insurance expense (or expenses) will beunderstated. Net income will be overstated.b. Prepaid insurance (or assets) will be overstated.Owner’s eq uity will be overstated.3-5a.Insurance Expense .................... 1,215Prepaid Insurance............... 1,215 b.Insurance Expense .................... 1,215Prepaid Insurance............... 1,2153-6Unearned Fees .......................... 9,570Fees Earned .................... 9,5703-7a.Salary Expense ....................... 9,360Salaries Payable ............... 9,360 b.Salary Expense ....................... 12,480Salaries Payable ............... 12,480 3-8$59,850 ($63,000 – $3,150)3-9$195,816,000 ($128,776,000 + $67,040,000)3-10Error (a) Error (b)Over- Under- Over- U nder-stated stated s tated s tated1. Revenue for the year would be $ 0.................... $6,900 $ 0 $ 02. Expenses for the year would be 0 0 0 3,7403. Net income for the year would be 0 6,900 3,740 04. Assets at December 31 would be 0 0 0 05. Liabilities at December 31 would be 6,900 0 0 3,7406. Owner’s equity at December 31would be .................. 0 6,900 3,740 03-11$175,840 ($172,680 + $6,900 – $3,740)3-12a.Accounts Receivable .................. 11,500Fees Earned .................... 11,500b. No. If the cash basis of accounting is used, revenuesare recognized only when the cash is received.Therefore, earned but unbilled revenues would notbe recognized in the accounts, and no adjustingentry would be necessary.3-13a. Fees earned (or revenues) will be understated. Netincome will be understated.b. Accounts (fees) receivable (or assets) will beunderstated. Owner’s equity wi ll be understated.3-14Depreciation Expense ................... 5,200Accumulated Depreciation ........ 5,200 3-15a. $204,600 ($318,500 – $113,900)b. No. Depreciation is an allocation of the cost of theequipment to the periods benefiting from its use.It does not necessarily relate to value or loss ofvalue.3-16a. $2,268,000,000 ($5,891,000,000 – $3,623,000,000)b. No. Depreciation is an allocation method, not avaluation method. That is, depreciation allocatesthe cost of a fixed asset over its useful life.Depreciation does not attempt to measure marketvalues, which may vary significantly from year toyear.3-17a.Depreciation Expense ................. 7,500Accumulated Depreciation ........ 7,500 b. (1) Depreciation expense would beunderstated. Net income would be overstated.(2) Accumulated depreciation would beunderstated, and total assets would be overstated.Owner’s equity would be ove rstated.3-181.Accounts Receivable (4)Fees Earned (4)2.Supplies Expense (3)Supplies (3)3.Insurance Expense (8)Prepaid Insurance (8)4.Depreciation Expense (5)Accumulated Depreciation—Equipment 5 5.Wages Expense (1)Wages Payable (1)3-19a. Dell Computer CorporationAmount PercentNet sales $35,404,000 100.0Cost of goods sold (29,055,000) 82.1Operating expenses (3,505,000) 9.9Operating income (loss) $2,844,000 8.0b. Gateway Inc.Amount PercentNet sales $4,171,325 100.0Cost of goods sold (3,605,120) 86.4Operating expenses (1,077,447) 25.8Operating income (loss) $(511,242)(12.2)c. Dell is more profitable than Gateway. Specifically,De ll’s cost of goods sold of 82.1% is significantly less (4.3%) than Gateway’s cost of goods sold of86.4%. In addition, Gateway’s operating expensesare over one-fourth of sales, while Dell’s operating expenses are 9.9% of sales. The result is that Dell generates an operating income of 8.0% of sales, while Gateway generates a loss of 12.2% of sales. Obviously, Gateway must improve its operations if it is to remain in business and remain competitive with Dell.4-1e, c, g, b, f, a, d4-2a. Income statement: 3, 8, 9b. Balance sheet: 1, 2, 4, 5, 6, 7, 104-3a. Asset: 1, 4, 5, 6, 10b. Liability: 9, 12c. Revenue: 2, 7d. Expense: 3, 8, 114-41. f2. c3. b4. h5. g6. j7. a8. i9. d10. e4–5ITHACA SERVICES CO.Work SheetFor the Year Ended January 31, 2006AdjustedTrial BalanceAdjustmentsTrial BalanceAccount Title Dr. Cr. Dr. Cr. Dr. Cr.1 Cash 8 8 12 Accounts Receivable50 (a) 7 57 23 Supplies 8 (b) 5 3 34 Prepaid Insurance 12 (c) 6 6 45 Land 50 50 56 Equipment 32 32 67 Accum. Depr.—Equip. 2 (d) 5 7 78 Accounts Payable 26 26 89 Wages Payable 0 (e) 1 1 910 Terry Dagley, Capital 112 112 1011 Terry Dagley, Drawing 8 8 1112 Fees Earned 60 (a) 7 67 1213 Wages Expense 16 (e) 1 17 1314 Rent Expense 8 8 1415 Insurance Expense 0 (c) 6 6 1516 Utilities Expense 6 6 1617 Depreciation Expense0 (d) 5 5 1718 Supplies Expense 0 (b) 5 5 1819 Miscellaneous Expense 2 2 1920 Totals 2002002424213 21320ContinueITHACA SERVICES CO.Work SheetFor the Year Ended January 31, 2006Adjusted Income BalanceTrial BalanceStatement S heetAccount Title Dr. Cr. Dr. Cr. Dr. Cr.1 Cash 8 8 12 Accounts Receivable57 57 23 Supplies 3 3 34 Prepaid Insurance 6 6 45 Land 50 50 56 Equipment 32 32 67 Accum. Depr.—Equip. 7 7 78 Accounts Payable 26 26 89 Wages Payable 1 1 910 Terry Dagley, Capital 112 112 1011 Terry Dagley, Drawing 8 8 1112 Fees Earned 67 67 1213 Wages Expense 17 17 1314 Rent Expense 8 8 1415 Insurance Expense 6 6 1516 Utilities Expense 6 6 1617 Depreciation Expense5 5 1718 Supplies Expense 5 5 1819 Miscellaneous Expense 2 2 1920 Totals 213 213 49 67 164 146 2021 Net income (loss) 18 18 2122 6767 164164 224-6ITHACA SERVICES CO.Income StatementFor the Year Ended January 31, 2006Fees earned ........................... $67 Expenses:Wages expense ...................... $17Rent expense (8)Insurance expense (6)Utilities expense (6)Depreciation expense (5)Supplies expense (5)Miscellaneous expense (2)Total expenses ...................49Net income ............................ $18ITHACA SERVICES CO.Statement of Owner’s EquityFor the Year Ended January 31, 2006 Terry Dagley, capital, February 1, 2005 $112 Net income for the year ............... $18 Less withdrawals . (8)Increase in owner’s equity...........10Terry Dagley, capital, January 31, 2006 $122ITHACA SERVICES CO.Balance SheetJanuary 31, 2006 AssetsLiabilitiesCurrent assets: Currentliabilities:Cash ........... $ 8 Accounts payable $26 Accounts receivable 57 .. Wages payable 1 Supplies ....... 3 Totalliabilities ...... $ 27Prepaid insurance 6Total current assets $ 74Property, plant, and Owner’s E quity equipment: Terry Dagley,capital 122Land ........... $50Equipment ...... $32Less accum. depr. 725Total property, plant,and equipment 75 Total liabilitiesandTotal assets ..... $149 owner’s equity $1494-72006Jan.31 Accounts Receivable (7)Fees Earned (7)31 Supplies Expense (5)Supplies (5)31 Insurance Expense (6)Prepaid Insurance (6)31 Depreciation Expense (5)Accumulated Depreciation—Equipment 531 Wages Expense (1)Wages Payable (1)4-82006Jan.31 Fees Earned (67)Income Summary (67)31 Income Summary (49)Wages Expense (17)Rent Expense (8)Insurance Expense (6)Utilities Expense (6)Depreciation Expense (5)Supplies Expense (5)Miscellaneous Expense (2)31 Income Summary (18)Terry Dagley, Capital (18)31 Terry Dagley, Capital (8)Terry Dagley, Drawing (8)4-9SIROCCO SERVICES CO.Income StatementFor the Year Ended March 31, 2006Service revenue .......................$103,850Operating expenses:Wages expense ...................... $56,800Rent expense ....................... 21,270Utilities expense .................. 11,500Depreciation expense ............... 8,000Insurance expense .................. 4,100Supplies expense ................... 3,100Miscellaneous expense .............. 2,250Total operating expenses .. 107,020Net loss .............................. $ (3,170)4-10SYNTHESIS SYSTEMS CO.Statement of Owner’s Eq uityFor the Year Ended October 31, 2006 Suzanne Jacob, capital, November 1, 2005$173,750Net income for year ................... $44,250 Less withdrawals ...................... 12,000 Increase in owner’s equity...........32,250Suzanne Jacob, capital, October 31, 2006$206,0004-11a. Current asset: 1, 3, 5, 6b. Property, plant, and equipment: 2, 44-12Since current liabilities are usually due within one year, $165,000 ($13,750 × 12 months) would be reportedas a current liability on the balance sheet. Theremainder of $335,000 ($500,000 – $165,000) would bereported as a long-term liability on the balance sheet.4-13TUDOR CO.Balance SheetApril 30, 2006AssetsLiabilitiesCurrent assetsCurrent liabilities:Cash$31,500Accounts payable $9,500Accounts receivable21,850 Salaries payable1,750Supplies ......... 1,800Unearned fees 1,200Prepaid insurance 7,200 Total liabilities (12)Prepaid rent ..... 4,800Total current assets$67,150 Owner’s EquityProperty, plant, and equipment: Vernon Posey,capital 114,200Equipment ...... $80,600Less accumulated depreciation21,10059,500Totalliabilities andTotal assets $126,650 owner’sequity $126,6504-14Accounts Receivable .................... 4,100Fees Earned .................. 4,100 Supplies Expense ............... 1,300Supplies ..................... 1,300 Insurance Expense............... 2,000Prepaid Insurance ............ 2,000 Depreciation Expense ............ 2,800Accumulated Depreciation—Equipment 2,800 Wages Expense .................. 1,000Wages Payable ................ 1,000 Unearned Rent .................. 2,500Rent Revenue ................. 2,500c. Depreciation Expense—Equipmentg. Fees Earnedi. Salaries Expensel. Supplies Expense4-16The income summary account is used to close the revenueand expense accounts, and it aids in detecting and correcting errors. The $450,750 represents expense account balances, and the $712,500 represents revenue account balances that have been closed.4-17a.Income Summary ....................... 167,550Sue Alewine, Capital ............ 167,550 Sue Alewine, Capital ................... 25,000Sue Alewine, Drawing ............ 25,000b. $284,900 ($142,350 + $167,550 – $25,000)a. Accounts Receivableb. Accumulated Depreciationc. Cashe. Equipmentf. Estella Hall, Capitali. Suppliesk. Wages Payable4-19a.20022001Working capital ($143,034)($159,453)Current ratio 0.81 0.80b. 7 Eleven has negative working capital as of December31, 2002 and 2001. In addition, the current ratio is below one at the end of both years. While the working capital and current ratios have improved from 2001 to 2002, creditors would likely be concerned about the ability of 7 Eleven to meet its short-term credit obligations. This concern wouldwarrant further investigation to determine whetherthis is a temporary issue (for example, anend-of-the-period phenomenon) and the company’splans to address its working capital shortcomings.4-20a. (1) Sales Salaries Expense .......... 6,480Salaries Payable ................ 6,480(2) Accounts Receivable ............. 10,250Fees Earned ..................... 10,250b. (1) Salaries Payable ................ 6,480Sales Salaries Expense ............... 6,480(2) Fees Earned ..................... 10,250Accounts Receivable ............. 10,2504-21a. (1) Payment (last payday in year)(2) Adjusting (accrual of wages at end of year)(3) Closing(4) Reversing(5) Payment (first payday in following year)b. (1) .................. Wages Expense 45,000Cash ............................ 45,000(2) Wages Expense ................... 18,000Wages Payable ................... 18,000(3) Income Summary .................. 1,120,800Wages Expense ................... 1,120,800(4) Wages Payable ................... 18,000Wages Expense ................... 18,000(5) Wages Expense ................... 43,000Cash ............................ 43,000 Chapter6（找不到答案，自己处理了哦）Ex. 8–1a. Inappropriate. Since Fridley has a large number ofcredit sales supported by promissory notes, a notesreceivable ledger should be maintained. Failure tomaintain a subsidiary ledger when there are asignificant number of notes receivable transactions violates the internal control procedure that mandates proofs and security. Maintaining a notes receivable ledger will allow Fridley to operate more efficiently and will increase the chance that Fridley will detect accounting errors related to the notes receivable. (The total of the accounts in the notes receivable ledger must match the balance of notes receivable in the general ledger.)b. Inappropriate. The procedure of proper separationof duties is violated. The accounts receivable clerk is responsible for too many related operations. The clerk also has both custody of assets (cash receipts) and accounting responsibilities for those assets.c. Appropriate. The functions of maintaining theaccounts receivable account in the general ledger should be performed by someone other than the accounts receivable clerk.d. Appropriate. Salespersons should not be responsiblefor approving credit.e. Appropriate. A promissory note is a formal creditinstrument that is frequently used for creditperiods over 45 days.Ex. 8–2-aa.Customer Due DateNumber of Days Past DueJanzen Industries August 29 93 days (2 + 30 +31 + 30)Kuehn Company September 3 88 days (27 + 31+ 30)Mauer Inc. October 21 40 days (10 + 30)Pollack Company November 23 7 daysSimrill Company December 3 Not past dueEx. 8–3Nov.30 Uncollectible Accounts Expense .. 53,315*Allowances for Doubtful Accounts 53, *$60,495 – $7,180 = $53,315Ex. 8–4Estimated Uncollectible AccountsAge Interval Balance Percent AmountNot past due .......... $450,000 2% $9,0001–30 days past due ... 110,000 4 4,40031–60 days past due .. 51,000 6 3,06061–90 days past due .. 12,500 20 2,50091–180 days past due . 7,500 60 4,500Over 180 days past due 5,500 80 4,400 Total .............. $636,500$27,860Ex. 8–52006Dec. 31 Uncollectible Accounts Expense .. 29,435*Allowance for Doubtful Accounts 29,435 *$27,860 + $1,575 = $29,435Ex. 8–6a. $17,875 c. $35,750b. $13,600 d. $41,450Ex. 8–7a.Allowance for Doubtful Accounts ...... 7,130Accounts Receivable ............. 7,130b.Uncollectible Accounts Expense ....... 7,130Accounts Receivable ............. 7,130Ex. 8–8Feb.20 Accounts Receivable—Darlene Brogan 12,100 Sales ........................ 12,10020 Cost of Merchandise Sold ........ 7,260Merchandise Inventory ........ 7,260May 30 Cash ........................... 6,000Accounts Receivable—Darlene Brogan .... 6,00030 Allowance for Doubtful Accounts .6,100Accounts Receivable—Darlene Brogan 6,1Aug. 3 Accounts Receivable—Darlene Brogan 6,100 Allowance for Doubtful Accounts 6,13 Cash ........................... 6,100Accounts Receivable—Darlene Brogan 6,1 Ex. 8–9$223,900 [$212,800 + $112,350 –($4,050,000 × 21/2%)]Ex. 8–10Due DateInteresta. Aug. 31 $120b. Dec. 28 480c. Nov. 30 250d. May 5 150e. July 19 100Ex. 8–11a. August 8b. $24,480c. (1) Notes Receivable ............... 24,000Accounts Rec.—Magpie Interior Decorators 24,(2) Cash ........................... 24,480Notes Receivable ............... 24,000Interest Revenue (480)Ex. 8–121. Sale on account.2. Cost of merchandise sold for the sale on account.3. A sales return or allowance.4. Cost of merchandise returned.5. Note received from customer on account.6. Note dishonored and charged maturity value of noteto customer’s account recei vable.7. Payment received from customer for dishonored noteplus interest earned after due date.Ex. 8–132005Dec.13 Notes Receivable ............... 25,000Accounts Receivable—Visage Co. 25,31 Interest Receivable ............. 75*Interest Revenue (75)31 Interest Revenue (75)Income Summary (75)2006Apr.12 Cash ........................... 25,500Notes Receivable ............. 25,000Interest Receivable (75)Interest Revenue (425)*$25,000 × 0.06 × 18/360 = $75Ex. 8–14Mar. 1 Notes Receivable ............... 15,000Accounts Receivable—Absaroka Co. 15,18 Notes Receivable ............... 12,000Accounts Receivable—Sturgis Co. 12,Apr.30 Accounts Receivable—Absaroka Co. 15,125 Notes Receivable ............. 15,000Interest Revenue (125)June16 Accounts Receivable—Sturgis Co. 12,270Notes Receivable ............. 12,000Interest Revenue (270)July11 Cash ........................... 15,367Accounts Receivable—Absaroka Co. 15,Interest Revenue ............. 242* *$15,125 × 0.08 × 72/360 = $242Oct.12 Allowance for Doubtful Accounts .12,270Accounts Receivable—Sturgis Co. 12, Ex. 8–151. The interest receivable should be reportedseparately as a current asset. It should not bededucted from notes receivable.2. The allowance for doubtful accounts should bededucted from accounts receivable.A corrected partial balance sheet would be as follows:PEMBROKE COMPANYBalance SheetJuly 31, 2006。