Find the correct option, the option that explains the accounting treatment of customer’s note collected by bank.

Question

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Answer 1

Question

Chapter 8, Problem 1MCQ

To determine

Find the correct option, the option that explains the accounting treatment of customer’s note collected by bank.

Expert Solution & Answer

Answer to Problem 1MCQ

The correct answer is option (a).

Explanation of Solution

Bank reconciliation: Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

Justification for correct answer: Note receivable being collected by bank, is credited to bank account. But the company is not aware of it. So, while preparing bank reconciliation statement, company should add the amount to the cash balance per books. In the given case, bank collected $335 note and credited to the customer’s account, after deducting the collection charges of $15. So, bank would credit the difference of $320 ($335–$15) to the customer account, and the same would be added to the book balance. Hence, option (a) is the correct answer.

Conclusion

Hence, options (b), (c), (d), and (e) are incorrect, and the option (a) is the correct answer.

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Students have asked these similar questions

The following information is available for Hapley Company. The November 30 bank statement shows a $1,895 balance. The general ledger shows a $1,742 balance at November 30. A $795 deposit placed in the bank’s night depository on November 30 does not appear on the November 30 bank statement. Outstanding checks amount to $638 at November 30. A customer’s $335 note was collected by the bank in November. A collection fee of $15 was deducted by the bank and the difference deposited in Hapley’s account. A bank service charge of $10 is deducted by the bank and appears on the November 30 bank statement. Hapley partially completed a bank reconciliation, shown below. Required: Complete the bank reconciliation for Hapley using the template included below.

Acme Company has received its bank statement for the month ending May 31, which showed the following: Ending balance $10,650.05 NSF check 63.40 Service charge 10.70 After checking the bank statement and accounting records, the accountant has determined the following: The May cash balance per books is $10,781.76. The bank’s service charge and NSF check were not entered by the bookkeeper. A $354.60 deposit made on May 31 is not on the bank statement. Outstanding checks total $296.99. Prepare a proper bank reconciliation in proper format.

Peterson Company's general ledger shows a cash balance of $7,720 on May 31. May cash receipts of $1,340, included in the general ledger balance, are placed in the night depository at the bank on May 31 and processed by the bank on June 1. The bank statement dated May 31 shows an NSF check for $190 and a service fee of $60. The bank processes all checks written by the company by May 31 and lists them on the bank statement, except for one check totaling $1,710. The bank statement shows a balance of $7,840 on May 31. Prepare a bank reconciliation to calculate the correct ending balance of cash on May 31. (Amounts to be deducted should be indicated with a minus sign.) Bank's Cash Balance Before reconciliation After reconciliation PETERSON COMPANY Bank Reconciliation May 31 SA Company's Cash Balance Before reconciliation 0 After reconciliation SA 0

Answer 2

Question

Chapter 8, Problem 1MCQ

To determine

Find the correct option, the option that explains the accounting treatment of customer’s note collected by bank.

Expert Solution & Answer

Answer to Problem 1MCQ

The correct answer is option (a).

Explanation of Solution

Bank reconciliation: Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

Justification for correct answer: Note receivable being collected by bank, is credited to bank account. But the company is not aware of it. So, while preparing bank reconciliation statement, company should add the amount to the cash balance per books. In the given case, bank collected $335 note and credited to the customer’s account, after deducting the collection charges of $15. So, bank would credit the difference of $320 ($335–$15) to the customer account, and the same would be added to the book balance. Hence, option (a) is the correct answer.

Conclusion

Hence, options (b), (c), (d), and (e) are incorrect, and the option (a) is the correct answer.

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Answer 3

Question

Chapter 8, Problem 1MCQ

To determine

Find the correct option, the option that explains the accounting treatment of customer’s note collected by bank.

Expert Solution & Answer

Answer to Problem 1MCQ

The correct answer is option (a).

Explanation of Solution

Bank reconciliation: Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

Justification for correct answer: Note receivable being collected by bank, is credited to bank account. But the company is not aware of it. So, while preparing bank reconciliation statement, company should add the amount to the cash balance per books. In the given case, bank collected $335 note and credited to the customer’s account, after deducting the collection charges of $15. So, bank would credit the difference of $320 ($335–$15) to the customer account, and the same would be added to the book balance. Hence, option (a) is the correct answer.

Conclusion

Hence, options (b), (c), (d), and (e) are incorrect, and the option (a) is the correct answer.

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Answer 4

Question

Chapter 8, Problem 1MCQ

To determine

Find the correct option, the option that explains the accounting treatment of customer’s note collected by bank.

Expert Solution & Answer

Answer to Problem 1MCQ

The correct answer is option (a).

Explanation of Solution

Bank reconciliation: Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

Justification for correct answer: Note receivable being collected by bank, is credited to bank account. But the company is not aware of it. So, while preparing bank reconciliation statement, company should add the amount to the cash balance per books. In the given case, bank collected $335 note and credited to the customer’s account, after deducting the collection charges of $15. So, bank would credit the difference of $320 ($335–$15) to the customer account, and the same would be added to the book balance. Hence, option (a) is the correct answer.

Conclusion

Hence, options (b), (c), (d), and (e) are incorrect, and the option (a) is the correct answer.

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Answer 5

Chapter 8, Problem 1MCQ

To determine

Find the correct option, the option that explains the accounting treatment of customer’s note collected by bank.

Expert Solution & Answer

Answer to Problem 1MCQ

The correct answer is option (a).

Explanation of Solution

Bank reconciliation: Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

Justification for correct answer: Note receivable being collected by bank, is credited to bank account. But the company is not aware of it. So, while preparing bank reconciliation statement, company should add the amount to the cash balance per books. In the given case, bank collected $335 note and credited to the customer’s account, after deducting the collection charges of $15. So, bank would credit the difference of $320 ($335–$15) to the customer account, and the same would be added to the book balance. Hence, option (a) is the correct answer.

Conclusion

Hence, options (b), (c), (d), and (e) are incorrect, and the option (a) is the correct answer.

Answer 6

Chapter 8, Problem 1MCQ

To determine

Find the correct option, the option that explains the accounting treatment of customer’s note collected by bank.

Expert Solution & Answer

Answer to Problem 1MCQ

The correct answer is option (a).

Explanation of Solution

Bank reconciliation: Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

Justification for correct answer: Note receivable being collected by bank, is credited to bank account. But the company is not aware of it. So, while preparing bank reconciliation statement, company should add the amount to the cash balance per books. In the given case, bank collected $335 note and credited to the customer’s account, after deducting the collection charges of $15. So, bank would credit the difference of $320 ($335–$15) to the customer account, and the same would be added to the book balance. Hence, option (a) is the correct answer.

Conclusion

Hence, options (b), (c), (d), and (e) are incorrect, and the option (a) is the correct answer.

Answer 7

Chapter 8, Problem 1MCQ

To determine

Find the correct option, the option that explains the accounting treatment of customer’s note collected by bank.

Answer 8

Expert Solution & Answer

Answer to Problem 1MCQ

The correct answer is option (a).

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Bank reconciliation: Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

Justification for correct answer: Note receivable being collected by bank, is credited to bank account. But the company is not aware of it. So, while preparing bank reconciliation statement, company should add the amount to the cash balance per books. In the given case, bank collected $335 note and credited to the customer’s account, after deducting the collection charges of $15. So, bank would credit the difference of $320 ($335–$15) to the customer account, and the same would be added to the book balance. Hence, option (a) is the correct answer.

Answer 12

Conclusion

Hence, options (b), (c), (d), and (e) are incorrect, and the option (a) is the correct answer.

Answer 13

Ch. 8 - Prob. 1MCQ Ch. 8 - Prob. 2MCQ Ch. 8 - Prob. 3MCQ Ch. 8 - Prob. 4MCQ Ch. 8 - Prob. 1DQ Ch. 8 - Prob. 2DQ Ch. 8 - Prob. 3DQ Ch. 8 - Prob. 4DQ Ch. 8 - Prob. 5DQ Ch. 8 - Prob. 6DQ

Find the correct option, the option that explains the accounting treatment of customer’s note collected by bank.

Concept explainers

Find the correct option, the option that explains the accounting treatment of customer’s note collected by bank.

Answer to Problem 1MCQ

Explanation of Solution

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Chapter 8 Solutions