Question

On December 1, 2019, Skysong, Inc. had the following account balances. Debit Credit Cash $17,300 Accumulated Depreciation—Equipment $2,900 Notes Receivable 2,100 Accounts Payable 6,100 Accounts Receivable 7,000 Common Stock 52,100 Inventory 16,500 Retained Earnings 11,900 Prepaid Insurance 1,500 $73,000 Equipment 28,600 $73,000 During December, the company completed the following transactions. Dec. 7 Received $3,600 cash from customers in payment of account (no discount allowed). 12 Purchased merchandise on account from Vance Co. $13,000, terms 1/10, n/30. 17 Sold merchandise on account $15,500, terms 2/10, n/30. The cost of the merchandise sold was $9,000. 19 Paid salaries $2,200. 22 Paid Vance Co. in full, less discount. 26 Received collections in full, less discounts, from customers billed on December 17. 31 Received $2,600 cash from customers in payment of account (no discount allowed). Adjustment data: 1. Depreciation $200 per month. 2. Insurance expired $410.

The statement from Jackson County Bank on December 31 showed a balance of $23,580. A comparison of the bank statement with the Cash account revealed the following facts.

1.		The bank collected a note receivable of $2,100 for Skysong, Inc. on December 15 through electronic funds transfer.
2.		The December 31 receipts were deposited in a night deposit vault on December 31. These deposits were recorded by the bank in January.
3.		Checks outstanding on December 31 totaled $1,100.
4.		On December 31, the bank statement showed an NSF charge of $640 for a check received by the company from L. Bryan, a customer, on account.

Prepare a bank reconciliation as of December 31 based on the available information. (Hint: The cash balance per books is $23,620. This can be proven by finding the balance in the Cash account from parts

Journalize the adjusting entries resulting from the bank reconciliation and adjustment data. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31
	(To record collection of notes receivable)
Dec. 31
	(To record NSF charge)
Dec. 31
	(To adjust depreciation)
Dec. 31
	(To adjust insurance)

Answer 1

Skysong, Inc Bank Reconciliation As of December 31, 2019 Balance as per Bank Statement 23,580 Balance as per Cash Book 23,620 Add: Deposits in Transit Add: 2,600 Note receivable collected by bank 2,100 Less: Outstanding Checks Less: (1,100) NSF charges (640) Adjusted Bank Balance 25,080 Adjusted Book Balance 25,080

Skysong, Inc Journal entries Date Account 31-Dec Cash Notes Receivable Credit Debit $ 2,100 $ 2,100 $ 640 31-Dec Bank charges expense Cash $ 640 $ 200 31-Dec Depreciation expense Accumulated Depreciation-Equipment $ 200 $ 410 31-Dec Insurance expense Prepaid Insurance $ 410

Skysong, Inc Assets Income Stmt heads Prepaid Insurance Equipment 1,500 28,600 = Liabilties + Stockholders Equity Accumulated = Accounts + Common + Retained Dep-Equip = Payable + Stock + Earnings + Revenues - Expenses (2,900) = 6,100 + 52,100 + 11,900 + 13,000 + 15,500 + + + Accounts Notes Cash Receivable Receivable Inventory 17,300 7,000 2,100 16,500 3,600 (3,600) 13,000 15,500 (9,000) (2,200) (12,870) (130) 15,190 (15,500) 2,600 (2,600) 23,620 800 2,100 20,370 2,100 (2,100) (640) Sales Revenue (9,000) Cost of goods sold (2,200) Salaries expense + + (13,000) + Date 1-Dec 7-Dec 12-Dec 17-Dec 17-Dec 19-Dec 22-Dec 26-Dec 31-Dec Unadj Bal 31-Dec 31-Dec 31-Dec 31-Dec Adj Bal + + (310) - Sales discounts 1,500 28,600 (2,900) = 6,100 + 52,100 11,900 + 15,190 - (11,200) + + + + + + + (200) = + + + (640) Bank charges expense (200) Depreciation expense (410) Insurance expense (12,450) + + + (410) 1,090 25,080 800 - 20,370 28,600 (3,100) = 6,100 + 52,100 + 11,900 + 15,190 -