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Friday, August 6, 2010

Valix Finacc vol 1 Problem 4- 10

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 4-10


Balance per book (squeeze)                                                                                 2,120,000
Add: Proceeds of bank loan                                                               500,000
         Proceeds of note collected                                                      435,000         935,000

Total                                                                                                                      3,055,000

Less: Bank service charge                                                                       5,000
         NSF check                                                                                    50,000           55,000            
Adjusted book balance                                                                                        3,000,000

Balance per bank (squeeze)                                                                                 3,070,000
Add: Deposit in transit                                                             450,000
         Bank error (200,000 – 20,000)                                                      180,000        630,000
Total                                                                                                                     3,700,000
Less: Outstanding checks (750,000 – 50,000)                                                            700,000
Adjusted bank balance                                                                                       3,000,000

Adjusting entries:

Cash in bank                                                                                       880,000
Bank service charge (5,000 + 15,000)                                         20,000
Accounts receivable                                                                             50,000
        Loan payable                                                                                                  500,000
        Notes receivable                                                                                 400,000
        Interest income                                                                                                 50,000

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