Answered: The cash account for Norwegian Medical…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The cash account for Norwegian Medical Co. at April 30 indicated a balance of $89,775. The bank statement indicated a balance of $125,160 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

a.	Checks outstanding totaled $31,540.
b.	A deposit of $18,000, representing receipts of April 30, had been made too late to appear on the bank statement.
c.	The bank collected $24,075 on a $22,500 note, including interest of $1,575.
d.	A check for $1,700 returned with the statement had been incorrectly recorded by Norwegian Medical Co. as $170. The check was for the payment of an obligation to Universal Supply Co. for a purchase on account.
e.	A check drawn for $290 had been erroneously charged by the bank as $920.
f.	Bank service charges for April amounted to $70.

	Required:
1.	Prepare a bank reconciliation. Be sure to complete the statement heading. Refer to the Labels and Amount Descriptions for the exact wording of text entries. “Add:” or “Deduct:” will automatically appear if it is required. Enter all amounts as positive numbers.
2.	Journalize the necessary entries. The accounts have not been closed. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
3.	If a balance sheet is prepared for Norwegian Medical Co. on April 30, what amount should be reported as cash?

Bank Reconciliation

1. Prepare a bank reconciliation. Be sure to complete the statement heading. Refer to the Labels and Amount Descriptions for the exact wording of text entries. “Add:” or “Deduct:” will automatically appear if it is required. Enter all amounts as positive numbers.

Norwegian Medical Co.

Bank Reconciliation

1	Cash balance according to bank statement
2
3
4
5	Adjusted balance
6
7	Cash balance according to company’s records
8
9
10
11	Adjusted balance

Journal

2. Journalize the necessary entries. The accounts have not been closed. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6

Final Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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