Handout Problem- Chapter 7 Hansen Company has assigned you with the task of prep
ID: 2564130 • Letter: H
Question
Handout Problem- Chapter 7
Hansen Company has assigned you with the task of preparing its four-column proof of cash for the month of October 20x3. The following information is available:
Balance per books September 30 $10,725
October 31 5,836
Balance per bank September 30 6,915
October 31 8,276
Outstanding checks September 30 1,811
October 31 2,615
Cash receipts for October per bank 28,792
Per books 20,271
Deposits in transit September 30 5,621
October 31 996
Service charge for the month of October, charged by the bank but not recorded, was $596.
Proceeds on a note of the Jones Company were collected by the bank on October 28 but not entered on the books: principal, $2,900; interest, 396.
On October 26, a $1,144 check of the Billings Company was charged to Hansen Company’s account by the bank in error.
Dishonored checks are not recorded on the books unless they permanently fail to clear the bank. The bank treats them as disbursements when they are dishonored and deposits when they are redeposited. Checks totaling $1,335 were dishonored in October; $600 was redeposited in October and $735 in November.
a. Prepare a four-column proof of cash for the month ended October 31. Reconcile both from bank to correct and from book to correct.
b. Prepare all adjusting entries suggested by the proof of cash.
Explanation / Answer
SOLUTION
(A)
(B) Adjusting Entries-
September 30 ($) Cash Receipts ($) Cash Disbursements ($) October 31 ($) Balance as per bank 6,915 28,792 27,431 8,276 Deposits in transit Sept.30 5,621 (5,621) Oct.31 996 996 Outstanding checks Sept.30 (1,811) (1,811) Oct.31 2,615 (2,615) Bank error- check charged to worng account (1,144) 1,144 NSF Checks (600) (1,335) 735 Adjusted bank balance 10,725 23,567 25,756 8,536 Balance as per books 10,725 20,271 25,160 5,836 Adjustments to be made- Service charge 596 (596) Note proceed 3,296 3,296 Adjusted book balance 10,725 23,567 25,756 8,536Related Questions
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