years from January 1, 1916) Prepaid taxes and real estate Res. for bad and dbt. accounts Salaries general officers Salesmen accounts-advances on salaries Subscriptions and donations Work in process inv. 12-31-15 The inventories December 31, 1916, not on the books were: Finished goods Inst. Ex. 1917. 2. The following is the Balance Sheet of the A. B. Company January 1, 1915: The transactions for the year ending January 1, 1916, have been as follows: $793,501.00 600.00 Cash received from customers.. Rent received...... There has been purchased 1,232,000 lbs. raw material at 20 cents per lb. Sales have been... Discount and allowances on sales... Bad debts written off....... Disbursements have been made for Accounts payable.. Factory expense. Factory labor.. Factory repairs.. Office expense. Taxes... Inventories January 1, 1916 Raw material 412,595 lbs. having a market Semi-annual dividends of 3 per cent on pre- 823,334.00 23,519.00 2,143.00 243,356.00 7,489.00 351,426.00 23,843.00 1,927.00 52,914.00 58,471.00 7,853.00 Prepare Statement of Cost of Goods Manufactured and Sold, Profit and Loss statement, and Balance Sheet as of January I, 1916. Inst. Ex. 1917. (Note. Beginning with the Balance Sheet at January 1, 1915, it will be necessary to carry the transactions of the year through working papers or to set up skeleton ledger accounts in order to obtain the balances of the accounts which form the basis of the statements at January 1, 1916.) PRACTICE DATA (Continued from Chapter Fourteen) Transaction No. 13. You have now completed your audit of the books of the General Manufacturing Company, but you should prepare a Working Sheet similar in form to the one illustrated on pages 216 and 217. This should be done in the office of the client because it is frequently nesessary to secure additional information. If one were to prepare the Working Sheet in his own office, which might be at some distance from the office of the client, it would readily be seen that it would be inconvenient, and sometimes impossible, to secure the information needed. Remember that the Working Sheet as prepared by an auditor is not to be confused with what was formerly known as a six-column statement. The ledger accounts, as set up by you, show a proper summary of all the real and nominal accounts, consequently the Trial Balance prepared by you, as instructed in Transaction No. 11, is the same as will appear in the first two columns of your Working Sheet. The journal entries set up in accordance with the instructions in Transaction No. 12 will naturally be entered in the adjustment columns of the Working Sheet. After this has been done, you are ready to extend all of the accounts into the proper columns, classifying them as either nominal or real accounts. After the Working Sheet is prepared your work in the office of the client is completed. Transaction No. 14. You are now instructed to prepare a report for your client, the General Manufacturing Company based on your completion of the audit of their books. This report should consist of the following: Exhibit "A"-Balance Sheet. Exhibit "B"-Statement of Profit and Loss. Schedule "B-1"-Statement of Cost of Sales. Certificate. Transaction No. 15. Your client requests that you prepare closing journal entries to properly close the nominal accounts as at the close of business, Dec. 31, 1920. His bookkeeper will then post the closing entries to the proper ledger accounts. Appendix ACCOUNTING TERMINOLOGY Applicants have been asked to define the following accounting terms in the examinations given in the various states since the first law was passed in New York in 1896 recognizing accountancy as a profession. The definitions presented here are, in part, those prepared by the Committee on Terminology appointed by the American Association of Public Accountants. This Committee was made up of the following members, all of whom are Certified Public Accountants: J. Lee Nicholson, Chairman Henry B. Fernald, John R. Wildman. Terms not defined by the above Committee, but which have been used in the examinations are herein defined, and the definitions given are those sanctioned by the best accounting authorities. Abeyance. Held in suspense for future settlement or adjustment. Abstract of Postings. A list of ledger postings such as one drawn off for the purpose of proving the postings in the ledger with the books of original entry or for special information. Acceptance. (1) An agreement to pay a bill of exchange, draft, order or kindred instrument on the terms stated therein. (2) The document itself when bearing on its face the evidence of its acceptance. Accommodation. A loan of money or endorsement of another person's paper as a favor. Accommodation Paper. Instruments which a maker, drawer, acceptor or indorser, having no interest in the transaction, signs merely as an accommodation to another. Account. An entry or group of entries, either debits or credits or a combination of both, under a specific or descriptive heading, exhibiting the history and results of the transactions pertaining thereto. |