Determine financial solutions to the below problems.
You have been recruited as Senior Accounts Supervisor in Holman Groceries Company and your first task is to report on the below two issues at a meeting of managers within the next three days. Show your financial solutions to the below problems. (Treat each question as separate and exclusive.)
(Maximum ten (10) points are available for presentation)
1. Given the following selected adjusted balances of the accounts from the books of Holman Groceries Company, as at 12/31/2017.
Sales $185,620 Sales discount $3,100
Transportation-in 7,425 Purchases returns/allowances 1,820
Purchases 61,180 Transportation-out 5,060
Beginning inventory 38,250 Sales returns/allowance 4,645
Purchase discount 8,300 Sales salaries expenses 18,740
Warehouse rent 9,600 Office rent 18,000
Insurance expense 4,800 Lighting and heating 9,600
Admin salaries expense 8,300 Advertising expense 8,400
Supplies expense 6,600 Miscellaneous expense 12,900
Income from investment 49,000 Loss on sale of fixed asset 25,000
Dividends paid 12,000 Retained earnings 53,000
Note: The value of closing inventory, after physical count, was $32,100.
Required:
a. Journalize the closing entries for the company. 10 points
b. Prepare the multi-step income statement, in proper form, for period ended 12/31/2017. 30 points
(The joint costs identified are allocated in percentage of selling 55% and administration 45%.)
c. Calculate the gross profit ratio and the operating profit ratio? 10 points
2. The following information is available for Holman Groceries Company for the month of December 2018:
a. On December 31, after all transactions have been recorded, the balance in the company’s Cash account has a balance of $27,202.
b. The company’s bank statement shows a balance on December 31 of $29,279.
c. Check #3030 in the amount of $1,525 was found to be outstanding in the November 2017 reconciliation, and check #3556 in the amount of $1,459 was issued in December, 2017. Both checks are not amongst the batch of cancelled checks received from the Bank with the December, 2017 bank statement.
d. A credit memo included with the bank statement indicates that the bank collected $780 on a noninterest-bearing note receivable for Holman. The bank deducted a $10 collection fee and credited the remainder of $770 to Holman’s account.
e. A debit memo included with the bank statement shows a $67 NSF check from a customer, J. Brown.
f. A deposit placed in the bank’s night depository on December 31 totaled $1,675 and did not appear on the bank statement.
g. Examination of the checks on the bank statement with the entries in the accounting records reveals that check #3445 for the payment of an account payable was correctly written for $2,450, but was recorded in the accounting records as $2,540.
h. Included with the bank statement was a debit memorandum in the amount of $25 for bank service charges. It has not been recorded in the company’s books.
Required: Prepare the December bank reconciliation for Holman Groceries Company and update the cash book balance. 40 points
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