LO1 PROBLEM 7.1B Bank Reconciliation 03 The cash transactions and cash balances of Dodge, Inc., for November were as follows: 1. The ledger account for Cash showed a balance at November 30 of $6,750. 2. The November bank statement showed a closing balance of $4,710. 3. The cash received on November 30 amounted to $3,850. It was left at the bank in the night depository chute after banking hours on November 30 and therefore was not recorded by the bank on the November statement. 4. Also included with the November bank statement was a debit memorandum from the bank for $15 representing service charges for November. 5. A credit memorandum enclosed with the November bank statement indicated that a non- interest-bearing note receivable for $4,000 from Wright Sisters, left with the bank for collec- tion, had been collected and the proceeds credited to the account of Dodge, Inc. 6. Comparison of the paid checks returned by the bank with the entries in the accounting records revealed that check no. 810 for $430, issued November 15 in payment for computer equip- ment, had been erroneously entered in Dodge's records as $340. 7. Examination of the paid checks also revealed that three checks, all issued in November, had not yet been paid by the bank: no. 814 for $115, no. 816 for $170, no. 830 for $530. 8. Included with the November bank statement was a $2,900 check drawn by Steve Dial, a cus- tomer of Dodge, Inc. This check was marked "NSE." It had been included in the deposit of November 27 but had been charged back against the company's account on November 30. Instructions a. Prepare a bank reconciliation for Dodge, Inc., at November 30. b. Prepare journal entries (in general journal form) to adjust the accounts at November 30. Assume that the accounts have not been closed. State the amount of cash that should be included in the balance sheet at November 30. c. LO1 PROBLEM 7.3B Aging Accounts Receivable; Starlight, a Broadway media firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end an aging of the accounts receivable produced the following five groupings: L05 Write-offs a. Not yet due..... b. 1-30 days past due... c. 31-60 days past due ... d. 61-90 days past due... e. Over 90 days past due. Total.... $500,000 110,000 50,000 30,000 60,000 $750,000 On the basis of past experience, the company estimated the percentages probably uncollectible for the above five age groups to be as follows: Group a, 1 percent; Group b, 3 percent; Group, 10 percent; Group d. 20 percent; and Group e, 50 percent. The Allowance for Doubtful Accounts before adjustments at December 31 showed a credit bal- ance of $4,700. Instructions a. Compute the estimated amount of uncollectible accounts based on the above classification by age groups. b. Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount. 1 0 1
