Preparing a bank reconciliation for eugene company


Problem 1: The following are summary financial data for Parker Enterprises, Inc., and Boulder, Inc., for three recent years:

                                                                        Year     Year 2    Year 1
Net sales (in millions):
Parker Enterprises, Inc. . . . . . . . . . . . . . . . . . . $ 3,700 $ 3,875   $ 3,882
Boulder, Inc . . . . . . . . . . . . . . . . . . . . . . . . .     17,825  16,549    15,242
Net accounts receivable (in millions):
Parker Enterprises, Inc. . . . . . . . . . . . . . . . . . . . . 1,400    1,800    1,725
Boulder, Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5,525    5,800    6,205
1. Using the above data, compute the accounts receivable turnover and average collection period for each company for years 2 and 3.
2. Which company appears to have the better credit management policy?

Problem 2:  Preparing a Bank Reconciliation

Prepare a bank reconciliation for Eugene Company at January 31, 2006, using the information shown.

1. Cash per the accounting records at January 31 amounted to $145,604; the bank statement on this same date showed a balance of $129,004.

2. The canceled checks returned by the bank included a check written by the LeRoy Company for $3,528 that had been deducted from Eugene's account in error.

3. Deposits in transit as of January 31, 2006, amounted to $21,856.

4. The following amounts were adjustments to Eugene Company's account on the bank statement:

a. Service charges of $52.
b. An NSF check of $2,800.
c. Interest earned on the account, $80.

5. Checks written by Eugene Company that have not yet cleared the bank include four checks totaling $11,556.

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Accounting Basics: Preparing a bank reconciliation for eugene company
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