On October 31, Year 1, A company general ledger shows a checking account balance of $8,415. The company’s cash receipts for the
month total $74,440, of which $71,325 has been deposited in the bank. In addition, the company has written checks for $72,485, of which $71,090 has been processed by the bank. The bank statement reveals an ending balance of $12,165 and includes the following items not yet recorded by the company: bank service fees of $210, note receivable collected by the bank of $5,600, and interest earned on the account balance plus from the note of $620. After closer inspection, the company realizes that the bank incorrectly charged the company’s account $540 for an automatic withdrawal that should have been charged to another customer’s account. The bank agrees to the error. Required: 1. Prepare a bank reconciliation to calculate the correct ending balance of cash on October 31, Year 1. (Amounts to be deducted should be indicated with a minus sign.)
1 answer:
Answer:
Explanation:
Bank Reconciliation: The bank reconciliation deals with the bank statement balance and the cash statement balance. The motive is to compare these two statements so that the organization can run in a smooth manner.
There are various transactions due to which the bank statement balance and the cash statement balance do not match. To match these statements, we adjust the transactions accordingly.
The outstanding deposits is computed below:
= Company cash receipts - bank deposited
= $74,440 - $71,325
= $3,115
And, the outstanding checks is computed below:
= Company written checks - Processed by bank
= $72,485 - $71,090
= $1,395
The preparation of the bank reconciliation statement on October 31 is presented in the spreadsheet. Kindly find the attachment below:
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Answer:
MAD: 10.04, 11.53
MAPSE: 10% , 12%
MSE : 146.33, 178.72
Bias : -0.56 , -0.96
3-week moving average method is better
Explanation:
i ) Evaluate MAD ( average of absolute errors )
using 3 week moving average
= 10.04
using simple exponential smoothing
= 11.53
ii) MAPSE ( average of absolute percentage error )
using 3 week moving average
= 10%
using simple exponential smoothing
= 12%
iii) MSE ( average of Squared Errors )
3 week MV = 146.33 , Simple exponential smoothing = 178.72.
iv) Bias
3 week MV = -5/9 = -0.56, Simple exponential smoothing = -8.69/9 = -0.96.
v) TS ( Total error / MAD )
3 week MV = -5 / 10.04 = -0.49 ,
simple exponential smoothing = -8.69 / 11.53 = -0.75
b) I prefer 3-week moving average based on the values of MAD , MAPE, MSE, bias and TS which shows that there is a better estimate when using the 3 -weeks moving average.
Attached below is the Tabular calculations of the required parameters for the question
