ACC 500 Sections J & K Fall 2014
CASE 2 Adjusting Entries

Due Date: Monday November 10, 2014
Please hand in one hard copy per group at the beginning of the class session.

Submission of this assignment is made under the terms of our academic integrity code.

Team: _______________________________________________________

Each adjustment is worth 3 points. There is no partial credit for individual entries. The summary table at the end is worth 8 points. The case is worth 50 points.

You are presented with the following information for Little Co. Consider all situations independently. The company has a 12/31 year end and each item should be considered as a possible adjusting entry. Please present each adjusting entry as you deem necessary in good form followed by a brief explanation.

A1: The bank statement indicates that a check you recorded for $600 for a payment to your vendor cleared the bank for $6,000. You made the mistake of recording the check erroneously and the bank was correct.

A2: The balance in Allowance for Doubtful Accounts is $15,000 on the unadjusted trial balance. An aging of accounts receivable analysis indicates that the balance in the Allowance account should be $17,500.

A3: Analysis of the replacement cost for inventory indicates a decline of $17,000 which you consider to be material. The company uses the FIFO method of accounting for inventory.

A4: You analyze the securities held in the Marketable Securities account at year end by looking up the closing price on Yahoo Finance for each security and multiplying by the number of shares held. The result of your analysis indicates that the portfolio declined $7,000 in value as of the year end.

A5: Your analysis of the unadjusted trial balance shows a balance of $4,000 in Insurance Expense.