Question

In preparing a bank reconciliation for the month of November 2019, Williams Colas available the following information Balance per company books, 11/30/19 $39,140 Bank service charges for November 35 Deposits in transit, 11/30/19 NSF check received from a customer in November 1.285 6,300 Outstanding checks, 11/30/19 2.900 What is the correct amount of cash for this checking account at November 30, 2019? A B. $40,390. $39,140 C. D. $37,820 $35,740. 15. All of the following are reported as contra accounts in a balance sheet except: A. B. Additional Paid-in Capital. Allowance for Doubtful Accounts. Discount on Bonds Payable. Treasury Stock. D. 16. On July 1, 2019, Hicks Co. enters into a 3-year service contract with a customer and collects the fee for the first 12 months in advance. Hicks uses a balance sheet approach to recording the collection in advance. At December 31, 2019, Hicks makes the adjusting entry needed. How does the adjusting entry affect Hicks' balance sheet elements? A B. Assets Increase Decrease No Effect Increase Liabilities No Effect Decrease Decrease Increase Equities Increase Decrease Increase No Effect D. 17. For a company using a periodic inventory system and the net method to account for purchase discounts, the amount of a purchase discount missed from delaying payment to a supplier until after the discount period expires should appear in the: Inventory account. Purchase Discounts Lost account. Purchase Discounts account. Purchases account. C. D. Applying the allowance method, what journal entry is required to write off a specific customer account as uncollectible? B. Debit Bad Debt Expense, credit Accounts Receivable. Debit Allowance for Doubtful Accounts, credit Accounts Receivable. Debit Bad Debt Expense, credit Allowance for Doubtful Accounts. Debit Allowance for Doubtful Accounts, credit Bad Debt Expense. C. D.

Answer 1

Question - 14

Select - Option - (c) ..................= 37820

Company cash balance as given = 39140

To calculate the correct cash balance, we have make adjustment of items that might have to be adjusted. That means, items pending for normal bank clearance should not be added back or deducted for sake of reconciliation with bank balance.

Thus we have two items in the list that need normal entry into cash book.

Bank charges of 35 ..... (to be deducted for getting correct cash balance)

NSF check of 1285 .......( to be subtracted as it might have already been debited when received)

Thus the corrected cash = 39140 - 35 - 1285 = 37820

Question - (15)

Select - (A)

Additional Paid in Capital shows a credit balance and it shown directly in liabilities in Equity section. Thus it does not come opposite side of the balance sheet. But remaining all items are adjusted from credit balance subtracted from debit balance or debit balance subtracting from credit balance.

Question - (16)

Select - (D)

Additional cash received in advance ......... Increases the assets

Unexpired revenue increases ........ current liabilities

Question - (17)

Select - (B)

When discount assumed to be availed under net method is lost, after expiry of the period of discount an entry to record the liability increase is recorded. For this a debit is given Purchase discount lost account and corresponding credit to accounts payable.

Question - (18)

Select - (B)