5. Friends, Inc. received its bank statement for the month ended 12/31/18. The b
ID: 2521641 • Letter: 5
Question
5. Friends, Inc. received its bank statement for the month ended 12/31/18. The bank statement showed a balance of S10,102.87. The company's general ledger showed a balance of $8,656.11 The following items were dis when comparing the bank statement to the books of the company: 1. The bank charged check processing fees of $25.00. 2. There was a $1,825.52 automatic withdrawal to pay the mortgage Of the S1,825.52, $1,572.86 was for interest which had beern accrued. 3. The bank charged Friends, Inc. account $250.00 for a NSF check. The check was returned to Friends, Inc. and Friends, Inc. will seelk repayment of the $250 from the customer 4. A check for $210.50 written by Friends, Inc. was cleared by the bank on Friends Are Us, Inc.'s account. s. The bank collected a note receivable for Friends in the amount of S1,775.50 and deposited it to Friends' account. The principal repayment was for $1,490.00; the balance was interest, which had not been accrued. 6. The bank charged the company S50.00 to print new checks. 7, The bank correctly cleared check #2501for $482.00. The company had recorded this check in its books for $582.00. The check had been written in payment of utilities. . A $2,075.00 deposit was recorded on the company books on 12/31/18. The deposit was taken to the bank too late to be recorded on that day. The bank recorded the deposit on 1/2/19 9. Outstanding checks totaled S1,524.28 10. Friends' income tax refund of $2,062.00 was directly deposited in the bank account. Areceivable had been set up in 2018 in anticipation of the refund. Required Prepare a bank reconciliation in good form. b. Make all necessary journal entries to adjust Friends, Inc.'s books.Explanation / Answer
To Equity Share Capital 92000
(Being Equity share capital purchased by Fred (1800 shares for $72000) And Bill (500 shares for $20000))
Nov 1,05 Bank a/c……………………………………………Dr 40000
To Bank loan 40000
(being bank loan raised)
Nov 1,05 Property, Plant and Equipment……….Dr 72000
To bank a/c 72000
(being PPE bought)
Nov 1,05 Property, Plant and Equipment………..Dr 9000
To Accounts Payable 9000
(being site preparation cost charged by Mr. Mahoney capitalized)
Dec 31, 05 Bank a/c…………………………………………..Dr 40000
To, loan a/c 40000
(being loan provided by Marion Boats)
Dec 31,05 Property, Plant and Equipment………..Dr 140000
To Accounts Payable 140000
(being PPE account capitalized, and outstanding payments to be made to Holmes Brother Construction company)
Jan 31, 06 Accounts Payable……………………………….dr 40000
To bank 40000
(being Holmes Brother Construction company paid the 1st instalment)
Feb 28, 06 Accounts Payable……………………………….dr 40000
To bank 40000
(being Holmes Brother Construction company paid the 2nd instalment)
Mar 31, 06 Accounts Payable……………………………….dr 60000
To bank 60000
(being Holmes Brother Construction company paid the 3rd instalment)
Mar 31,06 Property, Plant and Equipment………..Dr 5000
To bank 5000
(being $2400 material surcharge and $2600 architect fees capitalized as part of PPE)
Mar 31,06 Finance Cost…………………………………….Dr 2000
To Interest payable 2000
(being interest expense on loan accrued)
Mar 31,06 bank loan a/c……………………………………..dr 40000
Interest payable……………………………….…dr 2000
To bank a/c 42000
(being bank loan and accrued interest repaid)
March Purchase a/c……………………………………..dr 153000
To bank a/c 153000
(being 17 boats purchased at a cash cost of $9000 each)
March Bank a/c………………………………………….dr 112000
Trade-in allowance…………………………dr 58000
Accounts Receivable………………………dr 13600
To Income from sales 183600
(being sales made and realised)
March Bank a/c………………………………………….dr 54800
Loss on trade-in stock a/c……………..dr 3200
To Income from sales 58000
(being trade-in stock sold and loss booked*)
March Fred Compensation a/c…………………dr 680
To bank 680
(being fred compensated at $40 each for 17 boats sold (17*40=680)*)
March Salary…………………………………………….dr 24000
To salary payable 24000
(being Fred and Bill’s salary payable from October’05 to march’06)
BANK A/C
Particulars
$
Particulars
$
To…
By…
Equity Share capital
92000
Property, plant & equipment
72000
Bank loan a/c
40000
Accounts payable
40000
Loan a/c
40000
Accounts payable
40000
Income from sales
112000
Accounts payable
60000
Trade-in allowance
54800
Property, plant & equipment
5000
Bank loan a/c
40000
Interest payable
2000
Boat Purchases (17*9000)
153000
Fred Compensation a/c
680
Balance c/d
2280
Total
412680
412680
Statement of Income and Expenses as at 31st March 2006
Particulars
$
INCOME
Income from Sales
241600
241600
EXPENSE
Purchases
153000
Finance Cost
2000
Salary and Wages
24000
Other Expenses (680+3200)*
3880
Trade-in allowance
58000
240880
Profit from operations (A-B)
720
Statement of Financial Position as on 31st March 2006
Particulars
$
Current Asset
Accounts receivable
13600
Non-Current Asset
Property, Plant and Equipment
226000
TOTAL
239600
Current Liabilities
Bank Overdraft
73880
Accounts Payable
9000
Salary payable
24000
Non-Current Liabilities
Loan a/c
40000
Owner Equity
Common Stock
92000
Retained Earnings
720
TOTAL
239600
Particulars
$
Particulars
$
To…
By…
Equity Share capital
92000
Property, plant & equipment
72000
Bank loan a/c
40000
Accounts payable
40000
Loan a/c
40000
Accounts payable
40000
Income from sales
112000
Accounts payable
60000
Trade-in allowance
54800
Property, plant & equipment
5000
Bank loan a/c
40000
Interest payable
2000
Boat Purchases (17*9000)
153000
Fred Compensation a/c
680
Balance c/d
2280
Total
412680
412680
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.