Harrison Company maintains a checking account at the First National City Bank. The bank provides a bank statement along with can
celed checks on the last day of each month. The July 2016 bank statement included the following information:
Balance, July 1, 2016 $ 57,053
Deposits 180,600
Checks processed (193,710 )
Service charges (30 )
NSF checks (1,750 )
Monthly loan payment deducted directly by bank from account
(includes $970 in interest) (3,870 )
Balance, July 31, 2016 $
38,293
The company’s general ledger account had a balance of $40,293 at the end of July. Deposits outstanding totaled $7,400 and all checks written by the company were processed by the bank except for those totaling $8,530. In addition, a $3,100 July deposit from a credit customer was recorded as a $310 debit to cash and credit to accounts receivable, and a check correctly recorded by the company as a $30 disbursement was incorrectly processed by the bank as a $300 disbursement.
Required:
1.Prepare a bank reconciliation for the month of July
2.Prepare the necessary journal entries at the end of July to adjust the general ledger cash account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field).
Balance, July 1, 2016 $ 57,053
Deposits 180,600
Checks processed (193,710 )
Service charges (30 )
NSF checks (1,750 )
Monthly loan payment deducted directly by bank from account
(includes $970 in interest) (3,870 )
Balance, July 31, 2016 $
38,293
The company’s general ledger account had a balance of $40,293 at the end of July. Deposits outstanding totaled $7,400 and all checks written by the company were processed by the bank except for those totaling $8,530. In addition, a $3,100 July deposit from a credit customer was recorded as a $310 debit to cash and credit to accounts receivable, and a check correctly recorded by the company as a $30 disbursement was incorrectly processed by the bank as a $300 disbursement.
Required:
1.Prepare a bank reconciliation for the month of July
2.Prepare the necessary journal entries at the end of July to adjust the general ledger cash account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field).
1 answer:
Answer:
Harrison company
Step 1.
Preparation of adjusted Cash Book
Balance as at July 31, 2016 = $40,293
Add: bal. of Deposit by credit customer = ($3,100 - $310) = $2,790
Deduct: Bank Service charge = -$30
Deduct: NSF checks = -$1,750
Deduct: loan repayment plus interest = -$3,870
Adjusted Balance =$37,433
Step 2. Bank reconciliation statement
As at 31st July 2016
Balance as per Bank Statement = $38,293
Deduct: uncleared Cheques = -$8,530
Add: Deposits outstanding = $7,400
Add: over disbursement by bank due for recovery = $270
Adjusted Bank Statement = $37,433
Compared to Adjusted Cash Book = $37,433
Difference = $0.
Step 3.
Journal entries required
Debit Cash Account with $2,790
Credit Account Receivables with $2,790
(Under recorded Customer deposit on sales)
Debit NSF expense = $1,750
Debit Loan Account with $2,900
Debit interest on Loan Account with $970
Debit Bank Charges expense a account with $30
Credit Cash Account with $5,650
(Direct debits to bank account on sundry transactions)
Explanation:
A bank reconciliation statement is presented to reconcile a 3rd party (Bank) statement of our Account and the Account maintained by the business in house.
The objective of the Bank reconciliation statement includes:
1. Identify the missing entries in either records
2. Flag the corrections the Bank needs to do to bring our balance to a correct state
3. Pass Journals to capture entries we have missed out or captured incorrectly
4. Identify unassigned entries for investigation
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Answer:
Please check the attached image for the depreciation schedule
2. Units of production method
Explanation:
Book value in year 1 = Cost of asset - Depreciation expense of year 1
Book value in year in subsequent years = previous book value - that year's depreciation expense
Accumulated depreciation is sum of deprecation expense
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($18,000 - $3,000) / 4 = $3,750
Depreciation expense each year of the useful life is $3,750
Depreciation expense using the double declining method = Depreciation factor x cost of the asset
Deprecation factor = 2 x (1/useful life) = 0.5
Depreciation expense in year 1 = 0.5 x $18,000 = $9,000
Book value = $18,000 - $9,000 = $9,000
Depreciation expense in year 2 = 0.5 × $9,000 = $4,500
Book value = $9,000 - $4,500 = $4,500
Depreciation expense in year 3 = 0.5 x $4,500 = $2250
Book value = $4,500 - $2250 = $2250
Depreciation expense in year 4 = 0.5 × $2250 = $1125
Depreciation expense using the unit of production method =( Total production in the year/ total productive capacity) × (cost of asset - Salvage value)
Depreciation expense in year 1 = ($18,000 - $3,000) x (300 / 3000) = $1,500
Depreciation expense in year 2 =18,000 - $3,000) x (900 / 3000) = $4,500
Depreciation expense in year 3 = (18,000 - $3,000) x (1200 / 3000) = $6,000
Depreciation expense in year 3 = (18,000 - $3,000) x (600 / 3000) = $3,000
The Units of production method tracks wear and tear accurately because deprecation depends on the production each year.
I hope my answer helps you
Answer:
The gross margin for December is: 0.5%.
The Gross margin of an organisation or business measure the extent by which its income exceeds the costs it incurs in producing its goods and or services.
The gross margin is measured in percentages. The higher the percentage of this margin, the higher the effectiveness of the company's management in deriving value from every dollar invested.
Explanation:
To arrive at Gross Margin, one is required to subtract the total cost of goods sold from total revenue for the period and dividing that number by revenue. That is:
Gross Margin (GM) =
Step I - Calculate Revenue
This is given as the total amount of goods sold which is:
800 x $500 = $400,000
Step II - Calculate Cost of Goods Sold
Cost of goods sold per unit is given as
$250 per unit.
Total Cost of Goods sold therefore is
800 x $250 = $200,000
Step III - Calculate Gross Margin
=
=
= or 0.5%
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