Chapter 1 Problem 4-11
Balance per book 5,000,000
Add: Proceeds of bank loan 516,000
Total 5,516,000
Less: Understatement of check in payment of account
(200,000 – 20,000) 180,000
Petty cash fund 10,000 190,000
Adjusted book balance 5,326,000
Balance per bank 5,500,000
Add: Undeposited collections 300,000
Erroneous bank charge 50,000
Deposit omitted from bank statement 150,000 500,000
Total 6,000,000
Less: Erroneous bank credit 130,000
Outstanding checks 544,000 674,000
Adjusted bank balance 5,326,000
Adjusting entries:
Cash in bank 326,000
Interest expense (84,000 x 2/12) 14,000
Prepaid interest expense 70,000
Accounts payable 180,000
Petty cash fund 4,000
Supplies 2,000
Transportation 3,000
Postage 1,000
Loan payable (516,000/86%) 600,000
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