Chapter 1 Problem 4-15
a. Reconciliation on July 1
Adjusted book balance 1,270,000
Add: Deposit in transit 500,000
Total 2,220,000
Less: Outstanding checks 950,000
Adjusted bank balance 1,270,000
Reconciliation on July 31
Book balance 470,000
Add: Note collected by bank 1,500,000
Total 1,970,000
Less: Bank service charge 20,000
Adjusted book balance 1,950,000
Bank balance 2,700,000
Add: Deposit in transit 400,000
Total 3,100,000
Less: Outstanding checks:
Check # 107 650,000
108 500,000 1,150,000
Adjusted bank balance 1,950,000
b. Adjusting entries on July 31
1. Cash in bank 1,500,000
Note receivable 1,500,000
2. Bank service charge 20,000
Cash in bank 20,000
Computation of deposit in transit – July 1
Deposit in transit – July 1 (squeeze) 500,000
Cash receipts per book 3,400,000
Total 3,900,000
Less: Deposits credited by bank 3,500,000
Deposit in transit – July 31 400,000
Computation of outstanding checks – July 1
Outstanding checks – July 1 (squeeze) 950,000
Checks drawn by depositor 4,200,000
Total 5,150,000
Less: Checks paid by bank 4,000,000
Outstanding checks – July 31 1,150,000
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