Explanation Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities. Credit , all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, and expenses. Non-sufficient checks (NSF) : When the customer bank returns the deposited check to the depositor’s bank indicating that there are insufficient funds in the account, such returned or bounced check is referred to as NSF check. Prepare the adjusting or closing journal entries in the books of Company W as follows: a. Service charges of $50 for the month of January were listed on the bank statement. Date Account Titles Debit ($) Credit ($) Bank service charge expense 50 Cash 50 (To record bank service charge) Table (1) Bank service charge expense is an expense account, and it decreases the value of stockholder’s equity by $50 because bank has charged service charges for safety box rent. Hence, bank service charge expense is debited by $50. Cash is an asset account, and it decreases the value of asset by $50. Hence, credit the cash account for $50. b. The bank charged a $250 check drawn on Restaurant W to Company W account. The check was included in the Company B’s bank statement. In this case, the given transaction is included in the banks statement of Company B, hence the adjusting or closing entry is not required. c. A check of $62 was returned to the bank because of insufficient fund on the bank statement of Company W. Date Account Titles Debit ($) Credit ($) Accounts receivable 62 Cash 62 (To record adjusting entry for NSF check) Table (2) Accounts receivable is an asset account, and it increases the value of asset by $62 because the bank has not collected the amount from the customer due to insufficient funds. As the collection could not be made, the amount of accounts receivable account is increased. Hence, debit the accounts receivable account for $62. Cash is an asset account, and it decreases the value of asset by $62...

Fundamental Financial Accounting Concepts

10th Edition

ISBN: 9781260159028

Author: Edmonds

Publisher: MCG

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Chapter 6, Problem 20AP

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Prepare the adjusting or closing journal entries in the books of Company W.

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Chapter 6, Problem 19AP

Chapter 6, Problem 21AP

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What was the firm's cash flow to creditors during 2023?

Chapter 6 Solutions

Fundamental Financial Accounting Concepts

Ch. 6 - Prob. 1Q Ch. 6 - Prob. 2Q Ch. 6 - Prob. 3Q Ch. 6 - Prob. 4Q Ch. 6 - Prob. 5Q Ch. 6 - Prob. 6Q Ch. 6 - Prob. 7Q Ch. 6 - Prob. 8Q Ch. 6 - Prob. 9Q Ch. 6 - Prob. 10Q

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