The bank statement contained two bank memoranda: 1. A credit of R$1,375 for the collection of a R$1,300 note for Brasilia Company plus interest of R$91 and less a collection fee of R$16. Brasilia Company has not accrued any interest on the note. 2. A debit for the printing of additional company checks R$34.
Financial Accounting Essay Example
At November 30, the cash balance per books was R$5,959 and the cash balance per the bank statement was R$9,101. The bank did not make any errors, but two errors were made by Brasilia Company.
Instructions (a)Using the four steps in the reconciliation procedure, prepare a bank reconciliation at November 30. (b)Prepare the adjusting entries based on the reconciliation. (Hint: The correction of any errors pertaining to recording checks should be made to Accounts Payable. The correction of any errors pertaining to recording cash receipts should be made to Accounts Receivable.)
7.3. Bummer Company’s bank statement from Fifth National Bank at August 31, 20X1, includes the information shown.
Balance, August 1 $11,284 August deposits 47,521 Checks cleared in August 46,475 Balance, August 31 16,856
Bank Credit memoranda: Collection of note receivable plus $105 interest $4,505 Interest earned 41
Bank deposit memorandum: Safety deposit box rent 20
A summary of the Cash account in the ledger for August shows: Balance, August 1, $10,959; receipts $50,050; disbursements $47,794; and balance, August 31, $13,215. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $2,600 and outstanding checks of $2,925.
The deposit in transit was the first deposit recorded by the bank in August. In addition, you determine that there were two errors involving company checks drawn in August: (1) A check for $340 to a creditor on account that cleared the bank in August was journalized and posted for $430. (2)A salary check to an employee for $275 was recorded by the bank for $277.
Instructions (a) Prepare a bank reconciliation at August 31. (b) Journalize the adjusting entries to be made by Bummer Company at August 31. Assume that interest on the note as has not been accrued by the company.
7.4. Information related to Izmir Company for 20X1 is summarized below.
Total credit sales TL1,100,000 Accounts receivable at December 31 369,000 Bad debts written off 22,150
Instructions (a) What amount of bad debts expense will Izmir Company report if it uses the direct write-off method of accounting for bad debts? (b) Assume that Izmir Company decides to estimate its bad debts expense based on 6% of accounts receivable. What amount of bad debts expense will Izmir record if Allowance for Doubtful Accounts has a credit balance of TL4,000? (c) Assume the same facts as in (b), except that there is a TL2,000 debit balance in Allowance for Doubtful Accounts. What amount of bad debts expense will Izmir record? (d) What is the weakness of the direct write-off method of reporting bad debts expense?
7.5. Presented below is an aging schedule for Jafar Company.
At December 31, 20X1, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $16,000.
Instructions (a) Journalize and post the adjusting entry for bad debts at December 31, 20X1. (b) Journalize and post to the allowance account the following events and transactions in the year 20X2. (1) March 1, a $1,900 customer balance originating in 20X1 is judged uncollectible. (2) May 1, a check for $1,900 is received from the customer whose account was written off as uncollectible on March 1. (c)
Journalize the adjusting entries for bad debts on December 31, 20X2. Assume that the unadjusted balance in Allowance for Doubtful Accounts is a debit of $2,000 and the aging schedule indicates that total estimated bad debts will be $42,300.
7.6. The following represents selected information taken from a company’s aging schedule to estimate uncollectible accounts receivable at year-end.