Page 3 N1146101 TESTING YOUR KNOWLEDGE CHAPTER7 4) Adam pany received a bank sta
ID: 2593538 • Letter: P
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Page 3 N1146101 TESTING YOUR KNOWLEDGE CHAPTER7 4) Adam pany received a bank statement for November, as follows: From: Central Bank, Brooklyn, NY 11201 o: Adams Company, 1652 Bond Street, Brooklyn, NY 11212 DATE Nov 1 BALANCIE $ 8,921.78 CHECKS DEPOSITS S 2,482.53 5,164.78 $ 5,096.12 12.00 SC 17 20 26 30 251.92 1,740.00 CM 4,646.19 197.11 NSF 2,791.24 S 5.794.61 SC Service Charge CM = Credit Memo NSF = Check returned DM Debit Memo The receipt of $1,740 on November 17 was for a $1,725 note collected by the bank, plus $20 current interest, minus a $5 service charge. Information from Adams Company records: CASH DISBURSEMENTS CASH RECEIPTS Check No 155 156 157 158 159 160 November 2,482.53 5,164.78 215.92 623.65 4,646.19 1,838.40 6 $ 5,069.12 2,791.24 1,008.92 29 All receipts were verified twice and confirmed to be correct. The company noted that check # 157 was recorded correctly by the bank; the check was written in payment of an invoice from a supplier of office supplies. Cash balance on November 30 as per company books: $2,819.59 Required: 1) Prepare the bank reconciliation on November 30, for the Adams Company. 2) Prepare the appropriate journal entries that Adams should record as a result of the reconciliationExplanation / Answer
Bank reconcilation Statement Less Less Outsatnding Check Service Charge -12 Check No 158 -623.65 Not Sufficent fund -197.11 Check No 160 -1838.4 Error in recording -36 Error in recording Deposit( 5069.12-5096.12) -27 -2489.05 Service Charge on note Collected -5 -250.11 Add Deposit in transit 1008.92 Note collected 1725 Interest 20 1745 Adjusted Balance 4314.48 Adjusted Balance 4314.48 Journal Entries DR CR Service charge 17 Cash 17 Account Receivable 197.11 Cash 197.11 Office Supplies 36 Cash 36 Cash 1725 Not receivable 1725 Cash 20 Interest Note 20
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