26. The Eric Manufacturing Company received its bank statement for the month end
ID: 2585293 • Letter: 2
Question
26. The Eric Manufacturing Company received its bank statement for the month ending Dec. 31. The bank statement indicates a balance of $32,400. The cash general ledger account as of the close of business on Dec. 31 has a balance of $8,350. In reconciling the balances, the following items are discovered.
20 points
(a) Collection by bank of a customers’ note for $1,500 less collection fees of $250.
(b) Deposits in transit, $51,000.
(c) The bank charged the depositor $800 for overdrafts.
(d) Checks outstanding on May 31, $79,100.
(e) A canceled check issued to Scott Corp. for $4,500 was not recorded on
Eric Company's books.
(f) A bank service charge of $20.00 from Wells Fargo.
Prepare a bank reconciliation statement. (Use the format of reconciling bank and depositor figures to corrected cash balance.)
Balance per bank statement, Dec. 31 .........
Add:
Deduct:
Corrected bank balance ......................
Balance per books, Dec. 31 ..................
Add:
Prepare the journal entries on the Erin Manufacturing Company books to record the bank
transactions.
27. ABC Manufacturing Company has a $100.00 petty cash fund. The fund has vouchers for entertainment $20.00 and $10.00 for advertising. What is the journal entry to create the fund on Jan 1st and replenish the fund on Jan 31st? 4 points
28. The following information was abstracted from the 2016 financial statements of Jennings Company: 16 points
Sales $747,000 *
Accounts Receivable, December 31, 2016 128,000
Allowance for Doubtful Accounts 1,220 (credit balance)
Sales discounts 18,000 *
Sales returns 12,400 *
* 30% related to credit sales and the sales discounts and sales returns relate to credit sales.
Prepare the adjusting entry for doubtful accounts expense under each of the following two assumptions:
(1) 3 percent of current accounts receivable are uncollectible.
(2) 2.5 percent of net credit sales are uncollectible.
(3) Assume John Smith has a debit balance is his account of $500. He is bankrupt and the credit manager informs you that you have to write off the account.
(4)Assume Tom Jones a previous customer with a balance of $1,000 was written off last year. He is out of bankruptcy and the credit manager informs you that he wants to reestablish his account and pay off his previous balance.
What is the journal entry to reestablish his account?
What is the journal entry for the payment of $1,050 ($50 is interest)?
(4). Assume the entry in (3) and that John Smith wants reinstate his account six months later and pays you $525.00 cash.
(5) For income taxes, Jennings Co. has to use the direct write-off method. In 2016, $10,000 of customers are bankrupt. Record the GJ entry?
(6) Will the entry in (5), increase or decrease net income?
Balance per bank statement, Dec. 31 .........
Add:
Deduct:
Corrected bank balance ......................
Balance per books, Dec. 31 ..................
Add:
Explanation / Answer
As per policy, only one question is allowed to answer, so answering 26 :
26)
Adjusted Balance as per Bank Statement :
Adjusted Balance of per Company Cash Book :
Journal Entries :
Balance as per Bank Statement 32400 Add: Deposit in transit 51000 Less: Check outstanding -79100 Adjusted Balance as per Bank Statement $4300Related Questions
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