Complete the June 30 bank reconciliation for Grey Company using the following in
ID: 2454931 • Letter: C
Question
Complete the June 30 bank reconciliation for Grey Company using the following information and with the given format:
1. Outstanding checks: No 372 $268 No 382 410 No 391 620
2. Check no 385 (for Repairs Expense was written for $452 but erroneously recorded in Grey’s records as 352 (difference $100)
3. Deposit in transit $2,120
4. Note collected by bank as agent for Grey company (no interest) $1,250
5. Debit memoranda from bank for NSF check of R. Rutherford $ 876
6. Bank service charge $ 25
Grey Company
Bank Reconciliation
June 30, 2014
Balance per bank statement, June 30, 2014
$8,394
Add:
Deduct:
Adjusted balance:
Balance per depositer’s records, June 30, 2014
$8,967
Add:
Deduct:
Adjusted balance:
2. Rainbow Company uses the balance sheet approach to estimate uncollectible accounts. By aging the customers' accounts, it was estimated that $7,325 of the company's month-end accounts receivable would prove to be uncollectible. Determine the amount that should be debited to the Uncollectible Accounts Expense account in the month-end adjusting entry under each of the following independent assumptions:
(a.) Before making any adjustment, the Allowance for Doubtful Accounts has a $785 credit balance. $________________
(b.) Before making any adjustment, the Allowance for Doubtful Accounts has a debit balance of $620. $________________
3. During 2015, Larsen Company's accounts receivable averaged $750,000. Larsen's 2015 income statement reported net sales of $6,780,000, uncollectible accounts expense of $160,000, and net income of $768,000. (Assume 365 days in a year.)
Using the information, above compute the following for Larsen Company: (a) Accounts receivable turnover: (Round to the nearest two decimals.) (b) Average number of days to collect accounts receivable (Round to nearest day, if necessary): (Round to the nearest %.)
3. On August 5, Quattro Building Co. purchases equipment costing $1,000,000. The useful life of the equipment was estimated to be eight years, with an estimated residual value of $50,000.
a) Compute the depreciation expense to be recognized each calendar year for financial reporting purposes (for every year that the asset will be depreciated) under the straight-line depreciation method (half-year convention). b) Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the 200 percent declining-balance method (half-year convention) with a switch to straight-line when it will maximize depreciation expense. c) Which of these two depreciation methods (straight-line or double-declining balance) results in the highest net income for financial reporting purposes during the first two years of the equipment’s use? Explain.
b) Give in general journal format the entry or entries necessary to correct Grey’s accounting records as of June 30. (Explanations may be omitted; one compound journal entry is acceptable).
Balance per bank statement, June 30, 2014
$8,394
Add:
Deduct:
Adjusted balance:
Balance per depositer’s records, June 30, 2014
$8,967
Add:
Deduct:
Adjusted balance:
Explanation / Answer
Grey Company
Bank Reconciliation
June. 30, 2014
Balance per bank statement, June 30, 2014
$ 8,394.00
Add:
Deposit in transit
$ 2,120.00
Deduct:
Outstanding checks (268+410+620)
$ (1,298.00)
Adjusted balance:
$ 9,216.00
Balance per depositor’s records, June 30, 2014
$ 8,967.00
Add:
Note collected by bank
$ 1,250.00
Deduct:
Check No. 385 Error
$ (100.00)
NSF Check
$ (876.00)
Bank service charge
$ (25.00)
Adjusted balance:
$ 9,216.00
Grey Company
Bank Reconciliation
June. 30, 2014
Balance per bank statement, June 30, 2014
$ 8,394.00
Add:
Deposit in transit
$ 2,120.00
Deduct:
Outstanding checks (268+410+620)
$ (1,298.00)
Adjusted balance:
$ 9,216.00
Balance per depositor’s records, June 30, 2014
$ 8,967.00
Add:
Note collected by bank
$ 1,250.00
Deduct:
Check No. 385 Error
$ (100.00)
NSF Check
$ (876.00)
Bank service charge
$ (25.00)
Adjusted balance:
$ 9,216.00
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