allessandro scarlatti company balance sheet december 31 2008 cash 40 000 accou 383994

Allessandro Scarlatti Company / Balance Sheet / December 31, 2008 Cash 40,000 Accounts Payable 61,000 Acc Receivables 89,000 Notes Payable 67,000 Less: Allowance for Doubtful Accounts 7000 = 82000 Inventories 171,000 / Prepaid Expenses 9000 = 128,000 = 302,000 The following errors in the corporation’s accounting have been discovered: 1 Jan 2009 cash distribursements entered as of Dec 2008 included payments of accounts payable in the amount of $39,000, on which a cash discount of 2% was taken. 2 The inventory included of 27,000 of merchandise that had been received at Dec 31 but for which so purchase invoices had been received or entered. Of this amount, 12,000 had been received on consignment; the remainder was purchased f.o.b. destination terms 2/10, n/30. 3 Sales for the first four days in Jan 2009 in the amount of 30,000 were entered in the sales book as of Dec 31 2008. Of these, $21500 were sales on account and the remainder were cash sales 4 Cash not including cash sales, collected in Jan 2009 and entered as of Dec 31 2008 totaled 35,324. Of this amount 23,324 was received on account after cash discounts of 2% had been declared the remainder represented the proceeds of a bank loan. Directions: A Restate the current assets and liabilities sections of balance sheet in accordance with good accounting practice. (Assume that both accounts receivable & accounts payable are recorded gross.) B Determine the net effect of your adjustments on Allessandaro Scarlatti Company’s retained earnings balance.