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Advanced Financial Accounting

Assignment 1
Submitted by:
Submitted to: Javeria Asim
Date: 10 August, 2017

Question 1:

At November 30, One Day Cleaners has available the following data concerning its bank
checking account:

1. At November 30, cash per bank statement was $37,758; per the accounting
records, $42500.
2. The cash receipts of $6244 on November were deposited on December 1.
3. Included on the bank statement was a credit for 4167 interest earning on this
checking account during November.
4. Two checks were outstanding at November 30: no. 921 for $964 and no. 925 for
$1085
5. Enclosed with the bank statement were two debit memoranda for the following
items: service charge for November, $14; and a $700 check of customer Tanya
Miller, marked “NSF”.

Instructions:

a) Prepare a bank reconciliation statement at November 30


b) Prepare adjusting entries (in general journal form) based on bank reconciliation.
Question 2
The cash transactions and cash balances of Norfleet Farm for July were as follows:

1. The ledger account for cash showed a balance at July 31 of $16,766,95.

2. The July bank statement showed a closing balance of $18,928.12.

3. The cash received on July 31 amounted to $4,017.15.It was left at the the bank the night
depositary chute after banking hours on July 31 and was not recorded by the bank on July
statement.

4. Also included with the July bank statement was a debit memorandum from the bank for $7.65
representing services charges for July.

5. A credit memorandum enclosed with the July bank statement indicated that a non-interest-
bearing note receivable for $4545 from Rene Manes, left with the bank for collection, had been
collected and the proceeds credited to the account of Norfleet Farms.

6. Comparison of the paid checks returned by the bank with the entries in the accounting records
revealed that the check no. 821 for $835.02, issues July 15 in payment for office equipment, had
been erroneously entered in Norfleet’s records as $853.02.

7. Examination of the paid checks also revealed that three checks, all issued in July, had not yet
been paid by the bank: no.811 for $861.12; no.814 for $640.80; no.823 for $301.05.

8. Included with the July bank statement was a $180 check drawn by Howard William, a
customer of Norfleet Farm. This check was marked ‘NSF’. It had been included in the deposit of
July 27 but had been charged back against the company’s account on July 31.

Instructions:

a. Prepare a bank reconciliation statement for Norfleet Farm at July 31.

b. Prepare journal entries to adjust the accounts at July 31.Assume that the accounts have not
been closed.

c. State the amount of cash which should be included in the balance sheet at July 31.

Question 3
Daytona Recycling Center reports the following information concerning cash balances and cash
transactions for the month of September:
1. Cash balance per bank statement as of September 30 was $20,893.25.

2. Two debits memoranda accompanied the bank statement one for $10 was for was for
service charges for the month: the other for $64.60 was attached to an ‘NSF’ check from
A.Smith.

3. Included with the bank statement was $69 credit memorandum for interest earned on the
bank account in September.

4. The paid checks returned in the September bank statement disclosed an error in Dayton’s
cash records. Check no.851 for $77.44 for telephone expense had erroneously been listed
in the cash payment journal as $44.77.

5. A collection charge for $26. 00 (not applicable to Daytone) was erroneously de-ducted
from the account by the bank. Notice that this was the bank’s error

6. Cash receipts of September 30 amounting to $585.25 were mailed to the bank too late to
be included in the September bank statement.

7. Checks outstanding as of September 30 were as follows: no. 860 for $151.93, :10. 867
for $82.46, and no. 869 for $123.61.

8. The Cash account showed the following entries during September:

Cash

Sept 1 Balance 18,341,8 Sept 30 Month’s Payment 11,598,63


2
3 Month’s receipts 14,441,5
0 8

Instructions:
a) Bank reconciliation statement at September 30
b) Prepare necessary adjusting entries is general journal form

Question 4

I. Bluegrass Tonight is a nightclub in Nashville. The information necessary for preparing bank
reconciliation for the company at November 30 appears below:
1. As of November 30, cash per the bank statement is $41, 631, per the accounting ' records,
$48,609.

2. Cash receipts 0f $9, 366 on November 30 were not deposited until December 1

3. Among the paid checks returned by the bank was a stolen check for $1, 512 paid in. error after
Bluegrass Tonight had officially notified the bank not to make payment. Thus, payment of this
check was a bank error and should not have been changed against Bluegrass Tonight’s bank
account.

4 The following memoranda accompanied the bank statement:

a. A debit memo for service charges, $21

b. A debit memo attached to an $1,167'check which Bluegrass had accepted from a


customer and deposited in its account, but which the bank had re turned with the marking
“NSF”

c. A credit memo for interest earned on the account during November, $135

5. The following checks had been issued by the nightclub but had not been paid by the bank as of
November 30: no. 921 for $2, 346; no. 924 for $1, 446; and no. 925 for $1,161. 1

Instructions:

Prepare the November 30 bank reconciliation statement

Question 5

During July the cash transactions and cash balances of Rapid Harvest were as follows:

1. The cash balance per the bank statement at July 31 was $28,945.27

2. The ledger account for Cash had a balance at July 31 of $26,686.95.

3. Cash receipts on July 31 amounted to $4,000. These cash receipts were left at the bank in
the night depository chute alter banking hours on-July 31 and therefore were not included
by the bank in the July bank statement.

4. Included with the July bank statement was a credit memorandum showing interest earned
by the depositor on this account in the amount of $80.

5. Another credit memorandum enclosed with the July bank statement showed that a non-
interest-bearing note for $3, 663 from Ralph Warde, left with the bank for collection, had
been collected and the proceeds credited to the account of Rapid Harvest.
6. Also included with the July bank statement was a debit memorandum from the bank, for
$19.45 representing service charges for July.

7. Comparison of the paid checks returned by the bank with the entries in the ' accounting
records revealed that check no. 922 for $4, 521. 50 issued July 15 in payment for salaries
expense had been erroneously entered' 1n the accounting records as $5, 421.50

8. Examination of the paid checks also revealed that three checks, all issued in July, had not
yet been paid by the bank: no. 921 for $944.32; no. 924 for $320.50; no. 935 for $538.15.

9. Included with the July bank statement was a $168. 20 check drawn by Edward Jones, a
customer of Rapid Harvest. This check was marked “NSF” It had been included' 1n the
deposit of July 27 but had been charged back against the company’s account on July 31.

Instruction:

a. Prepare bank reconciliation for Rapid Harvest at July 81.

b. Prepare journal entries (in general journal form) to adjust the accounts at July 31;
Assume that the accounts have not been closed

c. State the amount of cash which should be included' 1n the balance sheet at July 31.

Question 6

The information needed to prepare a bank reconciliation and the minted adjusting entries for
Wicked Pony at March 31 is listed below. ‘

1. Cash balance per the accounting records of Wicked Pony, $18,106.69.

2. The bank statement showed a balance of $22,134.22 at March 31.

3. Accompanying the bank statement was a debit memorandum relating to i check for $186
from a customer, D. Otay. The check was returned by the bank and stamped “NSF”.

4. Checks outstanding as of March 31 were as follows: no. 84 for $1,841.02; no 88 for


$1,323.00; no. 89 for $16.26.

5. Also accompanying the bank statement was a debit memorandum for $44. 80 ' for safe
deposit box rent; the bank had erroneously charged this item to the account of Wicked
Pony.

6. On March 29, the bank collected a non-interest-bearing note for Wicked Pony. The note
was for $2, 963; the bank charged a collection fee of $8. 40.
7. A deposit of $2, 008. 50 was in transit; it had been mailed to the bank on March ~31.

8. In recording a $160 check received on account from a customer, Ross Company, ' ' the
accountant for Wicked Pony erroneously recorded the amount collected as $16. The
check appeared correctly among the deposits on the March bank state meat.

9. The bank service charge for March amounted to $20. 40; a debit memo in this amount
was returned with the bank statement.

Instructions:
a) Prepare a bank reconciliation at March 31.
b) Prepare the necessary journal entries.
c) What amount of cash should be included 1n the company’s March 31 balance sheet?