Part D - JustAnswer by dandanhuanghuang

VIEWS: 44 PAGES: 16

									                           HENDRY CORPORATION
                             Bank Reconciliation
                             December 31, 2007


Balance per bank statement, December 31, 2007                     $   100,560

Add: Deposits in Transit                                          $    24,600

                                                                  $   125,160

Deduct: Outstanding Checks                           $   31,700   $    31,700

Adjusted Cash Balance                                             $    93,460


Balance per depositor's records, December 31, 2007                $    96,990


Add: Error on Check Stub No. 244                     $     270    $      270

                                                                  $    97,260

Deduct: Bank Service Charge                          $     200

   NSF Check Kent Company                            $    3,600   $     3,800

Adjusted Cash Balance                                             $    93,460
                               Comments




Balance per bank statement plus Deposits in transit
$100,560 + $24,600 = $125,160


$125,160 less deductions (outstanding checks) = Adjusted Cash Balance
$125,160 - $31,700 = $93,460




To add back per Error on Check # 244 - $1,520 - $1,250 = $270
Balance per bank statement plus difference between actual check amount
and recorded amount $96,990 + $270 = $97,260

Deduct for Bank service charges

Deduct for NSF check from Kent Company totaling $3,600
                                  HENDRY CORPORATION
                                     General Journal
                                    December 31, 2007
Date     Account Titles and Explanations                     Debit
2007
 Dec. 31 Bank Service Charges                                $     200
         Accounts Receivable - Kent Company                  $   3,600
            Office Equipment
            Cash
         To update general ledger per bank reconciliation.
Credit      Comments



$     270
$   3,530
                     HENDRY CORPORATION
                     Cash & Cash Equivalents
                       December 31, 2007



Total Cash per Bank Reconciliation             $    93,460

 Total Cash                                    $    93,460




Money Market Accounts                          $    75,000

High Grade - 90 Day Commercial Paper           $     3,000

 Total Cash Equivalents                        $    78,000



Cash & Cash Equivalents December 31, 2007      $   171,460
                                         Comments




The Highly Liquid Stock Investment ($86,000) is not included under the category of Cash
Equivalents. Investments in even the highest quality bonds & stocks of large corporations are
not viewed as meeting the criteria of cash equivalents, because they are not very safe, have a
very stable market value and/or mature within 90 days.
           HENDRY CORPORATION
              General Journal
             December 31, 2007
Date
2007
 Dec. 31
                                         HENDRY CORPORATION
                                            General Journal
                                           December 31, 2007
Account Titles and Explanations

Interest Receivable
    Interest Revenue
To adjust for interest revenue from Moran Industries Notes Receivable - ($100,000 * 6%)/12 = $500 per
Debit         Credit     Comments

$       500
              $    500
                                    HENDRY CORPORATION
                        Net Realized Value - Income Statement Approach
                                      December 31, 2007
                                                                       Debit/Less
Accounts receivable balance January 1, 2007
Accounts receivable written off during 2007                        $        140,000
Collections on account during 2007                                 $     21,213,600
Credit sales made during 2007
Reinstating Kent Company's account (paid with NSF check)

Accounts receivable balance December 31, 2007

Allowance for doubtful accounts balance January 1, 2007
Accounts receivable written off during 2007                        $        140,000
Uncollectible accounts expense in 2007 (2% of sales)

Allowance for doubtful accounts balance December 31, 2007



Net realizable value of accounts receivable at December 31, 2007
oach

           Credit/Add
       $      2,150,000


       $     20,000,000
       $          3,600

       $        800,000

       $         40,000

       $        400,000

       $        300,000



       $        500,000
                                             Comments




Total Accounts Receivable Credit/Adds less Debit/Less
$22,153,600 - $21,353,600 = $800,000



 2% of $20,000,000 (total credit sales) = $400,000
Total doubtful Accounts Balance Credits/Adds less Total doubtful Accounts Balance Debits
$440,000 - $140,000 = $300,000


Gross Accounts Receivable Balance less Allowance for doubtful Accounts Balance estimate.
$800,000 - $300,000 = $500,000
                        HENDRY CORPORATION
                         Partial Balance Sheet
                          December 31, 2007


Cash & Cash Equivalents                          $   171,460

Marketable Securities                            $    86,000

Notes Receivable                                 $   100,000

Interest Receivable                              $      500

Accounts Receivables                             $   500,000

   Total Financial Asset - December 31, 2007     $   857,960
                               Comments



Per Cash & Cash Equivalents calculation in Part B
High Liquid Stock Investments totaling $86,000 at current Market Value, vs.
$116,000 original purchase price.
Moran Industries 6-Month, 6% Note Receivable for sale of unused warehouse
to Moran.
First month's interest (Dec. 2007) for Moran $100,000 Notes Receivable @
6% for 6 Months.

Net Realized Value - Income Statement Approach per Part D

Sum of all Financial Assets.
                           HENDRY CORPORATION
                           Receivable Turnover Rate
                              December 31, 2007

Account Receivable (beginning of the Year) January 1, 2007
 Accounts receivable                                                   $   2,150,000.00
 Allowance for doubtful accounts                                       $      40,000.00
   Net realizable value                                                $   2,110,000.00

Account Receivable (end of Year) December 31, 2007
 Accounts receivable                                                   $     800,000.00
 Allowance for doubtful accounts                                       $     300,000.00
   Net realizable value                                                $     500,000.00

 Average Accounts Receivable                                           $      1,305,000
 Sales                                                                 $     20,000,000

 Accounts Receivable Turnover                                                      15.33
 Accounts Receivable Days                                                          23.82


Assume that it is normal for firms similar to Hendry Corporation to take and average of
45 days to collect an outstanding receivable. Is Hendry Corporations collection
performance above or below this average?
                                  Comments



See Part D - Net Realized Value - Income Statement Approach Calculation
See Part D - Net Realized Value - Income Statement Approach Calculation



See Part D - Net Realized Value - Income Statement Approach Calculation
See Part D - Net Realized Value - Income Statement Approach Calculation


($2,100,.000 + $500,000)/2 = $1,305,000
Credit sales made during 2007

Sales divided by Average Accounts Receivable ($20,000,000/$1,305,000 = 15.33)
365 Days divided by Accounts Receivable Turnover (365/15.33 = 23.82 days


Hendry Corporation's performance rate is 23.82 days, whereas the industry average
is 45 days. Hendry Corporation's collection performance is below the industry
standard.

								
To top