Question

g. The entry to record a write-of of an acoount wihen uning the direct wrise off method invelves a delblit to Allowance for Bad Detts b. debit so Accounts Receivable d detits so Bad Dabts Experme e, credit to Cash ompaty sold the machine for $1,000. What is the result of the disgosal transaction? of $44,000. Suppose yow No pain no loss c. Gain of s 10. Your soeheasinriceofod and selletis sses b. Loas of $1,000 Loss of $45,000 (selling price) of goods and colleets sales oftax of S%. What eurvert iability does the sales create? a Sales revenue of $194,400 c. Sales tax payable of $14,400. IL. (20) The December eash record of ABB Insurance follow: b. Unearned Revenue of $194,400 d. Sales revenue of $180,000 ash Credit Dee 3 S 4,150 2416 2417 2418 2419 2420 2421 5 850 160 670 1,690 1,450 1,200 16 2,190 1,870 31 640 ABB Insurance's cash account shows a balance of $16,650 atDecember 31. On December 31, the company received the following bank statement Bank Statement for December Beginning Balance S14,000 Dec. EFT s 400 Dec. 2 S 700 NSF 4,150 540 11 Check NO. 2416 19 22 Check NO. 2417 29 Check NO. 2418 31 Check NO. 2419 31 850 400 160 670 1,960 EFT 16 24 25 2,190 1,700 BC SC 10 Ending Balance$18,590 Notes: BC-bank collection; EFT- electronic funds transfer; NSF-nonsufficient funds check; SC-service charge Additional data for the bank reconciliation follows: a. The EFT credit was a receipt of rent. The EFT debit was an insurance payment. b. The NSF check was received from a customer named Dunlap Chemical. The $1,700 bank collection was for a note receivable. c. d. The correct amount of Check 2419 for rent expense is $1,940 instead of $1,490 on cash records. 1) Prepare the bank reconciliation for ABB Insurance as at December 31. 2) Journalize any required entries from the bank reconciliation. 2.

Answer 1

8)	Option [d] Debits to bad debts expense
9)	Option [a] No gain no loss
6)	Option [c] Sales tax payable
II) 1)	BANK RECONCILIATION STATEMENT AS ON DECEMBER 31
	Balance as per cash account		16650	Balance as per bank statement		18790
	Add:			[The correct bank balance should be 18790; there is an adding mistake of $200 in the bank statement]
	Note collected	1700		Add:
	Rent revenue	400		Deposit in transit	1870	1870
			2100			20660
			18750	Less:
	Less:			Checks outstanding (1450+1200+640)	3290
	Insurance expense	400				3290
	Rent expense - Mistake in check (1960-1690)	270
	NSF cheque	700
	Bank service charges	10	1380
	Adjusted balance as per ledger		17370	Adjusted balance as per bank statement		17370
2)	JOURNAL ENTRIES.
	Cash	1700
	Notes receivable		1700
	Cash	400
	Rent revenue		400
	Insurance expense	400
	Cash		400
	Rent expense	270
	Cash		270
	Accounts receivable	700
	Cash		700
	Bank service charges	10
	Cash		10