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Lecture

Bank Reconciliation Review Notes

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Department
Accounting
Course
ACTG 1P91
Professor
Linda Stillabower
Semester
Fall

Description
PA6–1 Req. 1 MARTINCOMPANY Bank Reconciliation May 31, 2008 Bank Statement Company's Books Ending balance per bank Ending balance per Cash statement ......................... account............................. $7,180 $7,400 Additions: Additions: Deposit in transit* ........4,000 Interest earned ............. 120 11,180 7,520 Deductions: Deductions: Bank service charges.... $ 60 NSF cheque – Outstanding cheques**. 4,000 B. A. Dugry...............280 340 Up-to-date cash balance... $7,180 Up-to-date cash balance... $7,180 *$22,000 – 18,000 = $4,000. **$23,400 – 22,100 + 2,700 = $4,000 Req. 2 (1) dr. Cash (+A) ..................................................120....................... cr. Interest revenue (+R,+SE).....................................120 Interest earned. (2) dr. Accounts receivable (B. A. Dugry) (+A)..........................280... cr. Cash (-A)...........................................................280.... Customer's cheque returned, insufficient funds. (3) dr. Bank fee expense (+E,-SE).........................................60....... cr. Cash (-A)............................................................60.... Bank service charges deducted from bank statement. These entries are necessary because the bank has appropriately recorded these changes in its accounts, b ut Martin Company hasn’t yet recorded them in its accounts. The Cash account (and the other accounts in the entries) must be updated before adjusted f inancial statements can be prepared. Req. 3 Balance in regular Cash account..................................................$7,180....... Req. 4 Balance Sheet (May 31, 2008): Current Assets: Cash ($7,180 + $50)................................................$7,230..... E7–6 Req. 1 Aged accounts receivable Estimated percentage uncollectible Estimated amount uncollectible 1-30 days $12,000 x 2% = $ 240 31-90 days 5,000 x 10% = 500 More than 90 days 3,000 x 30% = 900 Estimated balance in Allowance for Doubtful Accounts $1,640 Current balance in Allowance for Doubtful Accounts 300 Adjustment for Bad Debt Expense for the year $1,340 Allowance for Doubtful Accounts 300 Unadj. Bal. 1,340 Adjustment 1,640 Adj. Bal. The amount of bad debt expense for the year 2009 should be $1,340 (1,640 – 300). Req. 2 Allowance for Doubtful Accounts Unadj. Bal.
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