Norwest Ltd ("Norwest") received the bank statement from Hongkong Bank showing a balance of $59,782 at 31 January 2021. The cash account in the general ledger of Norwest showed a balance of $45,202 as at 31 January 2021. Norwest adjusts its account annually and its year end date is on 31 December. There were no outstanding checks and deposits in transit at the end of December 2020. The following information is also provided: 1. Two checks amounted to $1,400 and $4,200 were mailed to the bank for deposit but had not reached the bank before 31 January 2021. 2. Total checks issued by Norwest were $25,000 and the checks cleared by the Hongkong Bank were $20,500. 3. The bank statement showed that a check of $6,300 issued by Beautiful Ltd, a customer of Norwest, was deducted from the bank account of Norwest because of insufficient fund. 4. A 3-month note receivable made on 1 November 2020 of $23,000 and all 3 months accrued interests of $300 ($100 for cach month) were collected and credited directly to Norwest's bank account on 31 January 2021. No interest payment was received by Norwest since 1 November 2020. 5. Dividend income on investment of $600 was directly credited by the bank. 6. An error was discovered in the cash account, in which the payment of $4,100 for rent expense was erroncously recorded as $3,000. 7. The bank has incorrectly debited an amount of $820 to Norwest's bank account for a check issued by "Northwest" Ltd. (a) Prepare a bank reconciliation statement as at 31 January 2021. Show your workings. (b) Prepare the journal entries that should be made in the accounting records of Norwest Ltd as a result of the above bank reconciliation.
Norwest Ltd ("Norwest") received the bank statement from Hongkong Bank showing a balance of $59,782 at 31 January 2021. The cash account in the general ledger of Norwest showed a balance of $45,202 as at 31 January 2021. Norwest adjusts its account annually and its year end date is on 31 December. There were no outstanding checks and deposits in transit at the end of December 2020. The following information is also provided: 1. Two checks amounted to $1,400 and $4,200 were mailed to the bank for deposit but had not reached the bank before 31 January 2021. 2. Total checks issued by Norwest were $25,000 and the checks cleared by the Hongkong Bank were $20,500. 3. The bank statement showed that a check of $6,300 issued by Beautiful Ltd, a customer of Norwest, was deducted from the bank account of Norwest because of insufficient fund. 4. A 3-month note receivable made on 1 November 2020 of $23,000 and all 3 months accrued interests of $300 ($100 for cach month) were collected and credited directly to Norwest's bank account on 31 January 2021. No interest payment was received by Norwest since 1 November 2020. 5. Dividend income on investment of $600 was directly credited by the bank. 6. An error was discovered in the cash account, in which the payment of $4,100 for rent expense was erroncously recorded as $3,000. 7. The bank has incorrectly debited an amount of $820 to Norwest's bank account for a check issued by "Northwest" Ltd. (a) Prepare a bank reconciliation statement as at 31 January 2021. Show your workings. (b) Prepare the journal entries that should be made in the accounting records of Norwest Ltd as a result of the above bank reconciliation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Transcribed Image Text:Norwest Ltd ("Norwest") received the bank statement from Hongkong Bank showing a
balance of $59,782 at 31 January 2021. The cash account in the general ledger of
Norwest showed a balance of S45,202 as at 31 January 2021. Norwest adjusts its
account annually and its year end date is on 31 December. There were no outstanding
checks and deposits in transit at the end of December 2020. The following information
is also provided:
1. Two checks amounted to $1,400 and $4,200 were mailed to the bank for deposit but
had not reached the bank before 31 January 2021.
2. Total checks issued by Norwest were $25,000 and the checks cleared by the
Hongkong Bank were $20,500.
3. The bank statement showed that a check of $6,300 issued by Beautiful Ltd, a
customer of Norwest, was deducted from the bank account of Norwest because of
insufficient fund.
4. A 3-month note receivable made on 1 November 2020 of $23,000 and all 3 months'
accrued interests of $300 ($100 for each month) were collected and credited directly
to Norwest's bank account on 31 January 2021. No interest payment was received
by Norwest since 1 November 2020.
5. Dividend income on investment of $600 was directly credited by the bank.
6. An error was discovered in the cash account, in which the payment of $4,100 for
rent expense was erroncously recorded as $3,000.
7. The bank has incorrectly debited an amount of $820 to Norwest's bank account for a
check issued by "Northwest" Ltd.
(a) Prepare a bank reconciliation statement as at 31 January 2021. Show your
workings.
(b) Prepare the journal entries that should be made in the accounting records of
Norwest Ltd as a result of the above bank reconciliation.
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