1. Bank Reconciliation and Entries

The cash account for Collegiate Sports Co. on November 1, 20Y9, indicated a balance of $81,145. During November, the total cash deposited was $293,150, and checks written totaled $307,360. The bank statement indicated a balance of $112,675 on November 30, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

1. Checks outstanding totaled $41,840.
2. A deposit of $12,200, representing receipts of November 30, had been made too late to appear on the bank statement.
3. A check for $7,250 had been incorrectly charged by the bank as $2,750.
4. A check for $760 returned with the statement had been recorded by Collegiate Sports Co. as $7,600. The check was for the payment of an obligation to Ramirez Co. on account.
5. The bank had collected for Collegiate Sports Co. $7,385 on a note left for collection. The face of the note was $7,000.
6. Bank service charges for November amounted to $125.
7. A check for $2,500 from Hallen Academy was returned by the bank because of insufficient funds.

1. Prepare a bank reconciliation as of November 30, 20Y9.

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. If an amount box does not require an entry, leave it blank.

3. If a balance sheet were prepared for Collegiate Sports Co. on November 30, 20Y9, what amount should be reported as cash?

5. Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method

Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $2,000,000 of 9-year, 12% bonds at a market (effective) interest rate of 11%, receiving cash of $2,112,461. Interest is payable semiannually on April 1 and October 1.

a. Journalize the entry to record the issuance of bonds on April 1, 20Y1. If an amount box does not require an entry, leave it blank.

b. Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for six months, using the straight-line method. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

c. Why was the company able to issue the bonds for $2,112,461 rather than for the face amount of $2,000,000? The market rate of interest is

greater than less than

the contract rate of interest.