Question

3. Union Bank sent Paper Products their end of month bank statement for September. The end of month balance by the bank is $9,755.00. The statement shows that a deposit for $5,750 is in transit at the end of the statement period. The statement also revealed that checks for $75.00, $145.00, and $85.00 are outstanding. Union Bank collected a 90 day, 10 % Note Receivable for $ 3,000.00, charging $10 for the service. No interest has been accrued on the note. The bank charges a monthly account fee of $ 10.00. The end of month balance per company books is $12,145.00. Required: a. Prepare a bank reconciliation statement from the above information as on September 30. [10] b. Show any necessary journal entries for the reconciliation. [5] 4. Enter the following transactions in the respective special journals provided. Foot the columns and enter all posting references that need to be made at the end of the month. [14] Cash sales $ 6,000 Mar. 1. Purchased $ 10,000 of merchandise on credit from Wick Co. Terms 2/15, n/30, invoice number PIP 115 dated February 26th 3. Received payment on account from Dom, a debtor, $ 1,600 Sold merchandise on credit to Boss Co, $16,000, terms 5/10, net 30. Invoice number SOL 54 dated Mar 8th Made payment on a note receivable, $ 6,400. Purchased office supplies worth $ 800 on credit from Stout Supply, terms n/30, invoice number PIP 303 dated march 3rd. Purchased merchandise $24,000 on cash basis. Paid a supplier on account cash $ 15,600. 5. 8. 10. 15. 24. 28th Additional Information: In the General Ledger the following account numbers are designated: Cash: 111 Accounts Receivable: 114 Notes Receivable: 215 Office supplies: 117 Machinery t: 131 Accounts Payable: 212 Sales 411 Purchases: 512

Answer 1

Answer-3:

BANK RECONCILIATION September 30 Bank: Balance as per Bank Statement, September 30 ADD: Deposit in transit $ $ $ 9,755 5,750 15,505 LESS: Outstanding checks: Check No. Check No. Check No. Adjusted bank balance $ $ $ 75 145 85 $ 305 $ 15,200 $ 12,145 Books: Balance as per Company's record, September 30 ADD: Notes receivable collected by bank $ Interest accrued (3,000 10% ~ 90/360) $ 3,000 75 $ $ 3,075 15,220 LESS: $ Service charges Account fees Adjusted cash balance 10 10 $ 20 $ 15,200

Date Sep.30 Journal Entry for Adjustment to Book Balance Account & Explanations Debit ($) Credit ($) Cash 3,075 Interest revenue 75 Notes receivable 3,000 (to record cash receipt) Service charges Account fees Cash (to record cash payment) Sep.30

Answer-4:

Date Mar.01 Debit ($) Credit ($) 6,000 6,000 10,000 10000 Mar.03 10,000 Mar.03 10000 General Journal Account Titles Cash Sales Account payable Purchase-accrued (to reverse the accrual entry made in the month of February) Purchase Account payable (to record purchase on receive of invoice) Cash Account receivable Account receivable Sales Cash Notes receivable Office supplies Account payable Purchase Account payable Account payable Cash 1,600 Mar.05 1,600 16,000 Mar.08 16,000 6,400 Mar.10 6,400 800 Mar.15 800 24,000 Mar.24 24,000 15,600 Mar.28 15,600

Note: For March 08 and March 15 transaction, no accrual entry is required as the invoice is issued in the same month.

But for March 03 transaction an accrual entry should be passed in the month of February debiting Purchase-accrual account and crediting Account payable account as the invoice is dated February month. And this entry has to be reversed in the month of March when invoice is received.

Cash Debit Date Mar.01 Mar.05 Mar.10 Mar.28 GENERAL LEDGER Sales Account No. 411 Date Debit Credit Balance Mar.01 $ 6,000 $ 6,000 Mar.08 $ 16,000 $ 22,000 6,000 1,600 6,400 $ Account No. 111 Credit Balance $ 6,000 $ 7,600 $ 14,000 $ 15,600 $ (1,600) Account No. 512 Credit Balance $ 10,000 $ 34,000 Account No. 117 Credit Balance $ 800 Account Payable Date Debit Mar.03 Mar.15 Mar.24 Mar.28 $ 15,600 Notes receivable Date Debit Mar.10 Account No. 212 Credit Balance $ 10,000 $ 10,000 $ 800 $ 10,800 $ 24,000 $ 34,800 $ 19,200 Account No. 215 Credit Balance $ 6,400 $ 6,400 Purchase Debit Date Account receivable Date Debit Mar.05 Mar.08 $ 16,000 Account No. 114 Credit Balance $ 1,600 $ (1,600) $ 14,400 10,000 24,000 Mar.24 $ Office supplies Debit $ Date Mar.15 800