The current assets and current liabilities sections of the balance sheet of Allessandro Scarlatti Company appear as follows.
ALLESSANDRO SCARLATTI COMPANY BALANCE SHEET (PARTIAL) DECEMBER 31, 2014
Less: Allowance for doubtful accounts
The following errors in the corporation’s accounting have been discovered:
January 2015 cash disbursements entered as of December 2014 included payments of accounts payable in the amount of $41,500, on which a cash discount of 2% was taken.
The inventory included $31,500 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $11,400 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30.
Sales for the first four days in January 2015 in the amount of $32,250 were entered in the sales journal as of December 31, 2014. Of these, $22,810 were sales on account and the remainder were cash sales.
Cash, not including cash sales, collected in January 2015 and entered as of December 31, 2014, totaled $37,212. Of this amount, $25,872 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan.