Chapter 1 Problem 4-13
a. Bank reconciliation – June 30
Book balance 1,000,000
Add: Credit memo for note collected 300,000
Total 1,300,000
Less: NSF check 100,000
Service charge 4,000 104,000
Adjusted book balance 1,196,000
Bank balance 1,650,000
Add: Deposit in transit 400,000
Total 2,050,000
Less: Outstanding checks 854,000
Adjusted bank balance 1,196,000
Bank reconciliation – July 31
Book balance 1,400,000
Add: Credit memo for bank loan 500,000
Total 1,900,000
Less: Service charge 1,000
Adjusted book balance 1,899,000
Bank balance 2,650,000
Add: Deposit in transit 1,100,000
Total 3,750,000
Less: Outstanding checks 1,851,000
Adjusted bank balance 1,899,000
b. Adjusting entries, July 31
1. Cash in bank 500,000
Bank loan payable 500,000
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2. Bank service charge 1,000
Cash in bank 1,000
Computation of deposit in transit – July 31
Deposit in transit – June 30 400,000
Add: Deposits during July:
Book debits 4,000,000
Less: June credit memo for note collected 300,000 3,700,000
Total 4,100,000
Less: Deposits credited by bank during July:
Bank credits 3,500,000
Less: July credit memo for bank loan 500,000 3,000,000
Deposit in transit – July 31 1,100,000
Computation of outstanding checks – July 31
Outstanding checks, June 30 854,000
Add: Checks drawn by company during July:
Book credits 3,600,000
Less: June debit memos for
NSF check 100,000
Service charge 4,000 104,000 3,496,000
Total 4,350,000
Less: Checks paid by bank during July:
Bank debits 2,500,000
Less: July service charge 1,000 2,499,000
Outstanding checks, July 31 1,851,000
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