QUESTION 12 Enclosed with the bank statement received by Ace Products at August

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QUESTION 12 Enclosed with the bank statement received by Ace Products at August 31 was an NSF check for $400. No entry has yet been made by the company to reflect the bank's action in charging back the NSF check. During preparation of the bank reconciliation, the NSF check should be: Deducted from the balance per the bank statement 9. Added to the balance per the bank statement CAdded to the balance per the depositor's records Deducted from the balance per the depositor's records QUESTION 13 In preparing a bank reconcilation, interest revenue earned on the account shown on the bank statement should be: Deducted from the balance per the bank statement B Added to the balance per the depoaitor's records C Deducted from the balance per the depositor's records D Added to the balance per the bank statement QUESTION 14 An NSF check retumed by the bank should be entered in the depostor's accounting records by a debit to: A. An expense aocount C Accounts Payable DAccounts Receivable QUESTION 15 Sales dscounts are deducted from sales in the calculation of net sales. QUESTION 18 Selected inkoemation fron Jenna Conpany 2007 anneal report (December 31 yer-end) is shown below: $100,000 $ 80,000 Cot efGoods Sold havestories are valued by the lastin. first out (LIFO)ethod Jenna has used LIFO since 1960. The excess of current cost over the amost stated for inventories valuad by the LIFO mcthod sounted to approximatcly $20,000 at Decouuber 31, 2007 and $16,000 at Decamber 31. 5006 respectively Assuming a 40% income tax rate, the total amount saved n income taxes in 2007 fom using LIFO is: B. $12.000. $4,000 D. $ 1,800. QUESTION 17 Selected infonnation from Jenma Compay 2007 anonal report (Decenbar 31 year-end) is shown below 2007 2006 100000 80.000 60,000580,000 Cost of Goods Seld tavena nes are valued try de last ,st out (LIFO) method Jcma has used LIFO sauce 1960 The excess of current cost over amguat suted for iaveatones valued by the LIFO methed amounted to approximately $20,000 at December 31. 2007 and $16,000 at December 31. 2006 respectively The approximate curmrent value of the inventory as of December 31, 2007 is $100,000. B. $120,000. C $104,000. $136,000. QUESTION 18 The accounting records of Jen Company showed cash of $21,000 at June 30. The balance per the bank statement at June 30 was $23,070, The only reconciling item were deposits in transit of $6,000, outstanding checks totaling,400, and NSF check for $300 roturmed by te bank which Jon had not yet charged back to the customer, andbank service charge of $30. The preparation of a bank reconciliation should indicato cash owned by Jen at June 30 in the amount of: $20,.370 $20,670 $20,700 A. D.

Explanation / Answer

Ans 12: Option B

Reason: Value of nsf check is added with the bank balance as it is directly received by bank and business get the intimation from bank later. So it is added to bank balance.

Ans 13: Option B

Reason: it will increase the cash balance as the amount is alreeady credited in the passbook. So that will only reconcile the balance.

Ans 14: Option D

Journal entry will be as:

          Account Receivable

               To Cash

Ans 15: True

Formula for net sales is = gross sales- sales return-sales discount-sales allownce.

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