![2 Semester Cengage Now, Warren Accounting](https://www.bartleby.com/isbn_cover_images/9781305662308/9781305662308_largeCoverImage.gif)
Concept explainers
(1)
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.
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 prepare: Bank reconciliation of Company CS as at November 30.
![Check Mark](/static/check-mark.png)
Answer to Problem 8.4BPR
The adjusted cash balance per bank, and the adjusted cash balance per books of Company CS is $78,535.
Prepare bank reconciliation of Company CS as at November 30.
Company CS | ||
Bank Reconciliation | ||
November 30 | ||
Particulars | Amount ($) | Amount ($) |
Cash balance as per bank statement | 112,675 | |
Add: | ||
Deposit of May 31, not recorded by bank | 12,200 | |
Less: | ||
Outstanding checks | 41,840 | |
Bank error in charging check as $2,750 instead of $7,250 | 4,500 | 46,340 |
Adjusted cash balance per bank | 78,535 | |
Cash balance as per books | 66,935 | |
Add: | ||
Notes and interest receivable collected by bank | 7,385 | |
Error in recording check as $7,600 instead of $760 | 6,840 | 14,225 |
Less: | ||
Checks returned because of insufficient funds | 2,500 | |
Banks service charges | 125 | 2,625 |
Adjusted cash balance per books | 78,535 |
Table (1)
Working Notes:
Determine the balance per company’s book, November, 1.
Explanation of Solution
- The deposits which are not recorded by the bank are referred to as deposits in transit. Since the deposits in transit are not reflected on the bank statement, the company should add deposits in transit to cash balance per bank, while preparation of
bank reconciliation statement . - Outstanding checks are the checks that are issued by the company, but not yet paid by the bank. When the check is issued for payment, the company deducts the cash balance immediately. But the bank deducts only when the cash is paid for the issued check. So, company deducts the cash balance per bank to remove the differences.
- Notes receivable being collected by bank, is credited to bank account. But the company is not aware of it. So, while preparing bank reconciliation statement, company should add the amount to the cash balance per books.
- Error in recording checks and banks deducting service charge for the services rendered like lock box rental, or printed checks. But the company is not aware of such deductions. So, company deducts the cash balance per books while bank reconciliation preparation.
(2)
To prepare:
(2)
![Check Mark](/static/check-mark.png)
Explanation of Solution
Prepare journal entry to record
Date | Account Titles and Explanation | Ref. | Debit ($) | Credit ($) | |
November | 30 | Cash | 14,225 | ||
Notes Receivable | 7,000 | ||||
Interest Revenue | 385 | ||||
Accounts payable, R Co. | 6,840 | ||||
(To record receivable collected by bank) |
Table (2)
- Cash is an asset account. The amount is increased because bank collected note receivable, and an increase in assets should be debited.
- Notes Receivable is an asset account. The amount has decreased because the amount to be received is collected by the bank, and, a decrease in assets should be credited.
- Interest revenue is a revenue account and increases the stockholders’ equity. Thus, increases in the stockholders’ equity should be credited.
- Accounts payable is a liability and increases the liability account. So, it is credited.
Prepare journal entry to record book error amount.
Date | Accounts and Explanation | Post Ref. | Debit ($) | Credit ($) | |
November | 30 | Accounts Payable - H A. | 2,500 | ||
Miscellaneous expenses | 125 | ||||
Cash | 2,625 | ||||
(To record amount under-payable by accountant) |
Table (3)
- Accounts Payable is a liability account. The under-paid payable is paid, and so, amount to be paid is decreased. A decrease in liability is debited.
- Miscellaneous expenses are expenses account and decrease the stockholders’ equity. Thus, decrease in the stockholders’ equity should be debited.
- Cash is an asset account. The amount is decreased to pay the under-paid check, and a decrease in asset is credited.
(3)
To report: Amount of cash in the balance sheet on November 30.
(3)
![Check Mark](/static/check-mark.png)
Explanation of Solution
Thus, the adjusted balance from the bank reconciliation should be reported as cash on the November 30 balance sheet for CS is $78,535.
Want to see more full solutions like this?
Chapter 8 Solutions
2 Semester Cengage Now, Warren Accounting
- Fairfield Company's payroll costs for the most recent month are summarized here: Item Hourly labor unges Description 920 hours $27 per hour 190 hours for Job 101 340 hours for Job 102 Factory supervision Production engineer Factory Janitorial work Selling, general, and administrative salaries Total payroll costs Required: 390 hours for Job 103 Total Cost $ 5,130 9,180 10,530 $ 24,840 4,350 7,100 1,200 8,800 $ 46,298 1. & 2. Prepare the journal entries for payroll and to apply manufacturing overhead to production. The company applies manufacturing overhead to products at a predetermined rate of $54 per direct labor hour Note: If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. View transaction list Journal entry worksheet A B Record Fairfield Company's payroll costs to be paid at a later date. Note Enter debits before credits. S.No Date 1 Account Title Debit Creditarrow_forwardNo wrong answerarrow_forwardL.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7. In 2015, L.L. Bean expects to sell more than 500,000 pairs of its duck boots. As of late November 2015, the backorder quantity for Bean Boots was estimated to be about 50,000 pairs. Question: Now assume that 5% of the L.L. Bean boots are returned by customers for various reasons. L. Bean has a 100% refund policy for returns, no matter what the reason. What would the journal entry be to accrue L.L. Bean's sales returns for this one pair of boots?arrow_forward
- The following data were taken from the records of Splish Brothers Company for the fiscal year ended June 30, 2025. Raw Materials Inventory 7/1/24 $58,100 Accounts Receivable $28,000 Raw Materials Inventory 6/30/25 46,600 Factory Insurance 4,800 Finished Goods Inventory 7/1/24 Finished Goods Inventory 6/30/25 99,700 Factory Machinery Depreciation 17,100 21,900 Factory Utilities 29,400 Work in Process Inventory 7/1/24 21,200 Office Utilities Expense 9,350 Work in Process Inventory 6/30/25 29,400 Sales Revenue 560,500 Direct Labor 147,550 Sales Discounts 4,700 Indirect Labor 25,360 Factory Manager's Salary 63,400 Factory Property Taxes 9,910 Factory Repairs 2,500 Raw Materials Purchases 97,300 Cash 39,200 SPLISH BROTHERS COMPANY Income Statement (Partial) $arrow_forwardNo AIarrow_forwardL.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7.In 2015, L.L. Bean expects to sell more than 500,000 pairs of its duck boots. As of late November 2015, the backorder quantity for Bean Boots was estimated to be about 50,000 pairs. Question: Assume that a pair of 8" Bean Boots are ordered on December 3, 2015. The order price is $109. The sales tax rate in the state in which the boots are order is 7%. L.L. Bean ships the boots on January 29, 2016. Assume same-day shipping for the sake of simplicity. On what day would L.L. Bean recognize the…arrow_forward
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College PubCentury 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage LearningFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337902663/9781337902663_smallCoverImage.jpg)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337280570/9781337280570_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305961883/9781305961883_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305654174/9781305654174_smallCoverImage.gif)