Question
A. Why do businesses need to prepare bank reconciliation statement and give six examples of the common activities that necessitate a bank reconciliation statement? B.
A. Why do businesses need to prepare bank reconciliation statement and give six examples of the common activities that necessitate a bank reconciliation statement? B. On December 1, 2014, Fullerton Company had the following account balances.
Debit Credit
Cash 18,200
Notes Receivable 2,200
Accounts Receivable 7, 500
Inventory 16, 000
Prepaid Insurance 1, 600
Equipment 28, 000
Accumulated Depreciation -Equip 3, 000
Accounts Payables 6, 100
Owners Capital 64, 400
During December, the company completed the following transactions.
December.
7 Received K3,600 cash from customers in payment of account (no discount allowed).
12 Purchased merchandise on account from Vance Co. K12,000, terms 1/10, n/30.
17 Sold merchandise on account K16,000, terms 2/10, n/30. The cost of the merchandise sold was K10,000.
19 Paid salaries K2,200.
22 Paid Vance Co. in full, less discount.
26 Received collections in full, less discounts, from customers billed on December 17.
31 Received K2,700 cash from customers in payment of account (no discount allowed).
Adjustment data:
Depreciation K200 per month.
Insurance expired K400.
Requirements
Journalize the December transactions.
Enter the December 1 balances in the ledger T-accounts and post the December transactions.
The statement from Jackson County Bank on December 31 showed a balance of K26, 130. A comparison of the bank statement with the Cash account revealed the following facts.
The bank collected a note receivable of K2, 200 for Fullerton Company on December 15.
The December 31 receipts were deposited in a night deposit vault on December 31. These deposits were recorded by the bank in January.
Checks outstanding on December 31 totaled K1,210.
On December 31, the bank statement showed an NSF charge of K680 for a check received by the company from L. Bryan, a customer, on account.
Must prepare the bank reconciliation as of December 31 based on the available information. (Hint: The cash balance per books is K26, 100.)
Journalize the adjusting entries resulting from the bank reconciliation and adjustment data.
Post the adjusting entries to the ledger T-accounts.
Also prepare the adjusted trial balance.
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