20) If a company made a bank deposit on September 30 that did not appear on the
ID: 2593922 • Letter: 2
Question
20) If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should A) Deduct the deposit from the September 30 book balance and add it to the October I book balance. B) Add the deposit to the book balance of cash. C) Deduct the deposit from the bank statement balance. D) Send the bank a debit memorandum. E) Add the deposit to the bank statement balance. 21) A company's income statement showed the following: net income, $124,000 and depreciation expense, $30,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; and accounts payable increased $3,400. Calculate the net cash provided or used by operating activities. A) $123,200. B) $118,000. C)S148,800. D) $178,000. E) $159,200. 22) Marlow Company purchased a machine on January I for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method? A) S300. B) $600. C) $480. D) $680. E) S544.Explanation / Answer
Answer 20-E. Add the deposit to the Bank Statement Balance Bank Recocilation Bank's Cash Balance Company's Cash Balance Per Bank Statement xxx Per General Ledger xxx Add: Deposit not recorded by bank xx Add: Note or Amt. Directly Collected by Bank xx Add: Bank Interest Recd xx Less: Outstanding Checks xx Less: Bank Service Charges Less: NSF Check Bank Balance after Reconcilation xxx Company Balance per Reconcilation xxx Answer 21-C. $148,800 Statement of Cash Flows (Indirect Method) (Partial) Cash Flow from opearating activities: Net Income (Loss) 124,000 Add/(Less) non cash effects on operating activities Depreciation expense: 30,000 Decrease in Accounts Receivables 9,400 $54 (18,000) Increase in Accounts Payable 3,400 24,800 Net Cash provided by operating activities 148,800 Answer 22-E. $544 Rate of dep. Under DDBM = 2 X 10% (Rate of dep. Under straight line) Rate of dep. Under DDBM = 20% Year Dep. Book Value 0 3,400 1 680 2,720 2 544 2,176
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