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In addition, the bank statement for the month of December is presented below: A company maintains its records using cash-basis accounting. During the year,
In addition, the bank statement for the month of December is presented below: A company maintains its records using cash-basis accounting. During the year, the company received cash from customers, $36,000, and paid cash for salaries, $25,000. At the beginning of the year, customers owe the company $2,000. By the end of the year, customers owe $4,500. At the beginning of the year, the company owes salaries of $4,000. At the end of the year, the company owes salaries of $5,000. Determine cash-basis net income and accrual-basis net income for the year. Revenues Income Statement (Cash Basis) Less: Salaries Expense $ Net Income S 36,000 (25,000) 11,000 Balance Deposits and Credits Total Amount Checks and Debits Balance No. Total Amount This Statement 5 $48,000 11 $42,380 $8,851 Last Statement No. $3,231 Checks and other debits No. Amount No. Amount No. Amount Deposits Date Balance Revenues Income Statement (Accrual Basis) $ Less: Salaries Expense $ Net Income $ 38,500 (26,000) 12,500 Bank Reconciliation Problem: 14 605 19 740 1,200 18 5,595 24 17 3,503 25 20 12,500 575 23 9,300 27,300 12/01 12/08 $14,916 $3,086 7,555 1,300 12/15 $5,158 1,545 DM 15,000 12/23 $6,113 440 NSF 22 SC 3,200 12/31 $8,851 Symbols: NSF (Not sufficient funds) SC (Service charge) CM (Credit Memo) DM (Debit Memo) The cash balances per books for the Jackson Company on November 30, 2003 and December 31, 2003, are $3,625 and $10,967 respectively. The following checks and receipts were recorded on the books for the month of Decem- ber 2003: Checks Receipts No. Amount No. Amount Amount Date 17 $3,503 22 $ 425 $ 27,300 12/05 18 5,505 23 9,300 15,000 12/21 19 740 24 575 3,200 12/27 20 12,500 25 7,555 2,150 12/31 21 205 All outstanding checks from November cleared the bank in December except for check #15 for $201. Check #18 for equipment was correctly recorded by the bank. The NSF check was from A. Claude, a customer, in settlement of an account receivable. An entry has not been made for the NSF check. Included in the bank's deposits is a $1,300 deposit incorrectly credited to the company's account. The deposit should have been posted to the credit of Meson Company. The debit memo is for the collection of a note payable including interest of $45 that has been accrued. The bank service charge is $22.00. Instructions Prepare a bank reconciliation at December 31.
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