Chapter 7, Problem 7.3APR

(a)

To determine

Bank reconciliation statement: Bank statement is prepared by bank. The company maintains its own bank related records. Thus, cash balance per bank and cash balance per books seldom agree. Hence, bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

To prepare: Bank reconciliation of Company PM as at June 30, 20Y1

(b)

To determine

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

• Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
• Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The transaction that arise from bank reconciliation statement

(c)

To determine

The amount of cash to be reported on the balance sheet of Company PM