Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 8, Problem 22E
(a)
To determine
Identify the errors in the bank reconciliation.
(b)
To determine
Prepare new bank reconciliation for Company P.
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Question 1:
Prepare a bank reconciliation as of May 31. Be sure to complete the statement heading. Refer to the Labels and Amount Descriptions for the exact wording of text entries. “Deduct:” or “Add:” will automatically appear if it is required. Whenever there is more than one adjusting item in the bank portion of the reconciliation or the general ledger portion of the bank reconciliation, enter in the order presented in the instructions. Enter all amounts as positive numbers.
BRENTWOOD BIKE CO.
Bank Reconciliation
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Cash balance according to bank statement
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Adjusted balance
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Cash balance according to company’s records
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Adjusted balance
Question 2:
Journalize the necessary entries. The accounts have not been closed. Refer to the chart of accounts…
The following June 30 bank reconciliation was prepared for Poway Co.
a. Identify the errors in the following bank reconciliation:
b. Prepare a new bank reconciliation for Poway , using the format shown in the illustrative problem.
Auditors typically will find the items lettered A–F in a client-prepared bank reconciliation.
Check the below image for client-prepared bank reconciliation -
Required:Assume these facts: On October 11, the auditor received a cutoff bank statement dated October 7. The September 30 deposit in transit; the outstanding checks 1281, 1285, 1289, and 1292; and the correction of the bank error regarding check 1282 appeared on the cutoff bank statement.a. For each of the preceding lettered items A–F, select one or more of the following procedures 1–10 that you believe the auditor should perform to obtain evidence about the item. These procedures may be selected once, more than once, or not at all. Be prepared to explain the reasons for your choices.1. Trace to cash receipts journal.2. Trace to cash disbursements journal.
3. Compare to the September 30 general ledger.4. Confirm directly with the bank.5. Inspect bank credit memo.6. Inspect bank debit memo.7. Ascertain reason for unusual delay, if…
Chapter 8 Solutions
Financial Accounting
Ch. 8 - Prob. 1DQCh. 8 - Why should the employee who handles cash receipts...Ch. 8 - Prob. 3DQCh. 8 - Why should the responsibility for maintaining the...Ch. 8 - Assume that Brooke Miles, accounts payable clerk...Ch. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Prob. 9DQCh. 8 - Prob. 10DQ
Ch. 8 - Prob. 1PEACh. 8 - Prob. 1PEBCh. 8 - Prob. 2PEACh. 8 - Prob. 2PEBCh. 8 - Prob. 3PEACh. 8 - Prob. 3PEBCh. 8 - Prob. 4PEACh. 8 - Prob. 4PEBCh. 8 - Financial data for Otto Company follow: a....Ch. 8 - Prob. 5PEBCh. 8 - Prob. 1ECh. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Pacific Bank provides loans to businesses in the...Ch. 8 - Prob. 5ECh. 8 - An employee of JHT Holdings, Inc., a trucking...Ch. 8 - Prob. 7ECh. 8 - Prob. 8ECh. 8 - Prob. 9ECh. 8 - Prob. 10ECh. 8 - Prob. 11ECh. 8 - Prob. 12ECh. 8 - Prob. 13ECh. 8 - Abbe Co. is a small merchandising company with a...Ch. 8 - Prob. 15ECh. 8 - Prob. 16ECh. 8 - Prob. 17ECh. 8 - Prob. 18ECh. 8 - Prob. 19ECh. 8 - Prob. 20ECh. 8 - Prob. 21ECh. 8 - Prob. 22ECh. 8 - Prob. 23ECh. 8 - Prob. 24ECh. 8 - Mattel, Inc., designs, manufactures, and markets...Ch. 8 - El Dorado Inc. has monthly cash expenses of...Ch. 8 - Prob. 27ECh. 8 - Amicus Therapeutics, Inc., is a biopharmaceutical...Ch. 8 - Prob. 1PACh. 8 - Cactus Restoration Company completed the following...Ch. 8 - Prob. 3PACh. 8 - Prob. 4PACh. 8 - Prob. 5PACh. 8 - Prob. 1PBCh. 8 - Cedar Springs Company completed the following...Ch. 8 - Prob. 3PBCh. 8 - Prob. 4PBCh. 8 - Prob. 5PBCh. 8 - During the preparation of the bank reconciliation...Ch. 8 - Prob. 2CPCh. 8 - Prob. 3CPCh. 8 - Prob. 4CPCh. 8 - Prob. 5CPCh. 8 - TearLab Corp. is a health care company that...
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- Which of the following items are found on a book side of the bank reconciliation? A. beginning bank balance B. outstanding checks C. interest income D. error made by bankarrow_forwardHajun Company received the following bank statement. Using the information from PB9 and PB10, prepare the bank reconciliation.arrow_forwardDrag the choices below to the following observations, in the course of preparing the Bank Reconciliation using the Adjusted Balance method. Match each item to a choice: Cost of ordered checks automatically debited by the bank Customer's NSF check returned by the bank Deposit of P717,718 erroneously encoded by the bank teller as P717,178 Check encashment for another client, erroneously debited by the bank against our асcount Outstanding checks Interest income Customer's post-dated check erroneously deposited and returned by the bank Bank service fees Customer's payment directly credited to depository bank Deposit in transit Choices: : Deduct from balance per book : Deduct from balance per book : Deduct from balance per book : Not a reconciling item : Add to balance per bank Deduct from balance per book : Add to balance per book Add to balance per bank : Add to balance per book Add to balance per bank : Deduct from balance per bank :::arrow_forward
- Question: The following errors were found when the controller at Mountain Motel was doing the June 30 bank reconciliation. On June 25, the bank posted a cheque in the amount of $825 to Mountain’s bank account. The cheque had been written by another company, Mountainside Company. For each of these errors, (a) indicate if and how it would be shown on the bank reconciliation, and (b) prepare the journal entry for Mountain if required. Please explain for the answer.arrow_forwardThe following reconciling items are applicable to the bank reconciliation for the Spahn Company. Select whether each of the following items would be added to the book balance, deducted from the book balance, added to the bank balance, or deducted from the bank balance. a. Outstanding checks. Added to the Book BalanceAdded to the Bank BalanceDeducted from the Book BalanceDeducted from the Bank Balance b. Bank credit memorandum for collecting a note for the depositor. Deducted from the Bank BalanceAdded to the Bank BalanceAdded to the Book BalanceDeducted from the Book Balance c. Bank debit memorandum for service charge. Added to the Bank BalanceDeducted from the Book BalanceDeducted from the Bank BalanceAdded to the Book Balance d. Deposit in transit.…arrow_forwardWhich procedure is an auditor most likely to use to detect a check outstanding at year-end that was not recorded as outstanding on the year-end bank reconciliation? Multiple Choice Prepare a bank transfer schedule using the client's cash receipts and cash disbursements journal. Receive a cutoff bank statement directly from the client's bank. Prepare a four column bank reconciliation using the year-end bank statement. Confirm the year-end balance using the standard form to confirm account balance information with financial institutions. MacBook Ainarrow_forward
- Bank reconciliation 2 On Oct. 31, 20x1, Dark Co.'s cash balance per recards is P7,540, while the balance per bank statement is P8,510. The following information is determined: a. The bank statement reflects a P780 deposit that is not yet recorded in the books. The deposit pertains to a collection of note receivable with a principal balance of P700; the difference represents the interest on the note, b. The bank statement also reflects a P25 withdrawal representing service charges for the month. c Dark Co. erroneously recorded a check drawn for P140 as P410. The check, which is payment for an account payable, cleared the bank at the correct amount. d. Dark Co. erroneously recorded a P910 collection of an account receivable as Pl90. The bank statement reflects the correct amount of deposit. A PL,900 check deposit on Oct. 31 is not yet reflected in the bank statement. E The following checks drawn by Dark Co. are not yet presented to the bank for payment: Check 075 for P325, Check 080 for…arrow_forwardWhich of the following statements about reconciling items is true? A Debit memoranda should be subtracted from the book side of the bank reconciliation. B An NSF check returned to the bank should be added back to book cash. C If a company discovers errors in its general ledger Cash account, it should call the bank to have the errors corrected. D Adjustments to the bank side of the bank reconciliation should be booked as adjustments to the general ledger Cash account. Please advise, the answer D is correct?arrow_forwardThe following reconciling items are applicable to the bank reconciliation for Forde Co.Indicate how each item should be shown on a bank reconciliation. (a) Outstanding checks. Select how the item should be shown on a bank reconciliation Added to cash balance per booksDeducted from cash balance per bankDeducted from cash balance per booksAdded to cash balance per bank (b) Bank debit memorandum for service charge. Select how the item should be shown on a bank reconciliation Added to cash balance per bankDeducted from cash balance per booksDeducted from cash balance per bankAdded to cash balance per books (c) Bank credit memorandum for collecting from customer an electronic funds transfer. Select how the item should be shown on a bank reconciliation Deducted from cash balance per bankDeducted from…arrow_forward
- Evaluate the effectiveness and state the shortcomings of thepreparation of a bank reconciliation by the controller in the manner described in thefollowing statement: “When I reconcile the bank account, the first thing I do is reviewthe sorted list of returned checks and find which numbers are missing. Next I determinethe amount of the uncleared checks by referring to the cash disbursements journal. If thebank account reconciles at that point, I am all finished with the reconciliation. If it doesnot, I search for deposits in transit, checks from the beginning outstanding check listthat still have not cleared, other reconciling items, and bank errors until it reconciles. Inmost instances, I can do the reconciliation in 20 minutes.”arrow_forwardPlease answer.arrow_forwardAlpesharrow_forward
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