Problem 1 - Please use the following information to complete a bank reconciliation for the Flag Company.
1. The ledger account for Cash showed a balance of $125,568 on October 31.
2. The October bank statement showed a closing balance of $114,828.
3. The Flag Company's manager deposited $16,000 in the bank's night depository on October 31.
Therefore, the bank had not recorded it on the bank statement for October.
4. The bank statement included a debit memorandum from the bank for a $50 monthly service charge.
5. Comparison of the bank statement with the book's records revealed that the accountant miss-recorded one of the checks. The amount for check #722 was incorrectly recorded as $915. The correct amount was $519. The bank statement showed the correct amount. The check was for payment to a supplier (A/P)
6. A credit memorandum included by the bank showed that the bank collected a $4,000 Note Receivable payment from Lillian Berchette (a customer of Flag Company).
The proceeds were deposited in the Flag Company account.
7. The bank statement did not include three checks written late in the month.
They were: #715, for $315, #720 for $524 and #728 for $275.
8. A customer of the Flag Company, Sharon Jameson, had written a check for $200 in payment for her account balance. It showed up on the bank statement as a NSF check. It had been included with an October 26th deposit, but the bank deducted that amount on the October 31 statement.
Directions:
1. Please complete the bank reconciliation using the form attached.
The Adjusted Cash Balance is given for the Bank side and the Book side as a Check Figure.
2. Then prepare the journal entries needed to adjust the accounts at October 31.
Problem 2 - Complete journal entries for the following transactions:
1. Sales for the month of June were $75,000. Using a percentage of sales method, and assuming 1% will be uncollectible, record the allowance.
2. On June 30, it was determined that two customers with receivables totaling $980 were not likely to pay
Record the journal entry for the write-off of these uncollectible accounts.
3. On July 15, surprisingly one of the customers who owed $400 and was written off on June 30, paid their bill
Record two journal entries. First, reinstate the customer account. Second, record the payment.
4. On July 31, our fiscal year ends, the allowance for doubtful accounts has a balance of $1,780CR
The company uses an aging method to calculate the desired allowance balance.
An accounts receivable aging shows the following:
30 days or less = $68,500
31 -60 days = $10,400
61-90 days = $4,300
Over 90 days = $1,200
The company wants an ending reserve equal to:
30 days or less = 1%
31-60 days = 3%
61-90 days = 5%
over 90 days = 15%
Determine the amount of the adjusting journal entry for uncollectible accounts expense and record it.
HINT: You have to factor in the balance in the Allowance account to determine the amount of the adjustment.
Attachment:- Assignment.rar