Darlington Company entered into the following business events during its first month of operations. The company uses the perpetu
al inventory system.
1) The company purchased $12,500 of merchandise on account under terms 3/10, n/30.
2) The company returned $2000 of merchandise to the supplier before payment was made.
3) The liability was paid within the discount period.
4) All of the merchandise purchased was sold for $19,000 cash.
What effect will the return of merchandise to the supplier in event (2) have on Darlington's financial statements?
a. Assets and stockholders' equity decrease by $2000.
b. None.
c. It is an asset exchange transaction.
d. Assets and liabilities decrease by $1940.
e. Assets and liabilities decrease by $2000.
1) The company purchased $12,500 of merchandise on account under terms 3/10, n/30.
2) The company returned $2000 of merchandise to the supplier before payment was made.
3) The liability was paid within the discount period.
4) All of the merchandise purchased was sold for $19,000 cash.
What effect will the return of merchandise to the supplier in event (2) have on Darlington's financial statements?
a. Assets and stockholders' equity decrease by $2000.
b. None.
c. It is an asset exchange transaction.
d. Assets and liabilities decrease by $1940.
e. Assets and liabilities decrease by $2000.
1 answer:
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Answer:
Adjusted cash balance : $25850
Explanation:
The goal of a reconciliation statement is to ascertain the differences between the banks records and the depositor’s records and make accounting changes as deemed appropriate. There is a general flow that is used to make the correcting entries:
1. The process flow starts with the bank’s ending cash balance
2. Add any deposits made by the company to the bank that are in transit
3. Deduct any cheques that are uncleared by the bank
4. Add or deduct any other differences available as necessary
5. In the company bank records, once again start with the ending balance
6. Add interests earned
7. Deduct any bank service fees, penalties and NSF (Non-Sufficient Funds) cheques.
8. Add or deduct any other differences available as necessary
At the end of this process, it is likely that both accounts would be equal and tally.
Please refer attached table for details on the calculation.
