DigDug Corporation had outstanding checks totaling $5,400 on its June bank recon

Question

DigDug Corporation had outstanding checks totaling $5,400 on its June bank reconciliation. In July, DigDug issued checks totaling $38,900. The July bank statement shows that $26,300 in checks cleared the bank in July. The amount of outstanding checks on DigDug's July bank reconciliation should be:

$12,600. $18,000. $5,400. $7,200.

Merchandise was sold on credit for $3,000, terms 1/10, n/30. How should the seller record the cash collection? Debit Cash, $3,000, and credit Accounts Receivable, $3,000, if collected within the discount period. Debit Cash, $3,000, credit Accounts Receivable, $2,970, and credit Sales Discounts, $30, if collected within the discount period. Debit Cash, $3,000, credit Accounts Receivable, $2,970, and credit Sales Discounts, $30, if collected after the discount period. Debit Cash, $3,000, and credit Accounts Receivable, $3,000, if collected after the discount period.

Your store buys ice cream at a cost of $1.50 a half gallon and sells it for $4 a half gallon. General and administrative expenses are $0.75 per half gallon. Which of the following statements is true? Your gross profit per half gallon is $2.50. Your gross profit per half gallon is $1.75. The difference between the selling price and the cost is recorded in the gross profit account. The difference between the selling price and the cost is recorded in the net profit account

Explanation / Answer

Start with outstanding checks as of June: . . . . . . . . . .$5400
Add the amount of checks issued in July: . . . . . . . . . .$38900
Subtract the amount of checks that cleared in July: . . ($26300)
--------------------------------------...
Outstanding checks as of the end of July: . . . . . . . . . .$18,000

The bit about a NSF check from a customer has no relevence to the company's outstanding checks - that info is a 'red herring' put into the question as an attempt to throw you off

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