Part 4 [50 points]

a) The following bank statement was received. Prepare a bank reconciliation for October:

Bank Statement

To: ABC Inc.October 31, 2015

Cheques/Charges/DebitsDeposits/CreditsBalance

#176701/Oct5,600

NSF Cheque05/Oct48,092

#176809/Oct673,000

#176915/Oct51,000

#177018/Oct8,800

#177326/Oct619,360

#177428/Oct26,500

#177531/Oct51,000

Service Charge31/Oct1,100

05/Oct19,500

11/Oct363,188

14/Oct275,000

15/Oct3,495

25/Oct1,495,480

1,422,0041,416,4041,387,812714,8121,078,0001,353,0001,305,4951,296,6952,792,1752,172,8152,146,3152,095,3152,094,215

Additional Information: The NSF cheque was received in September from Dylex Corporation for a sale dated September 15.

ABC Inc.Bank ReconciliationOctober 31, 2015Bank statement balance Book balance Add:Add: Deduct:Deduct: Outstanding cheques: Adjusted bank balance Adjusted book balance

b) Prepare the appropriate adjusting entries on October 31, 2015. Hint: Some additional information is provided below but where else might you look to find details relevant to preparing the adjusting entries?

• It is estimated that utilities used during October totalled $21,995.
• Actual count of ending merchandise inventory on October 31, 2015 was $2,201,747.
• Management estimates uncollectible accounts receivable based on the following rates of uncollectibility applied to outstanding accounts: Not yet due (2%), 1-30 days past due (9%), 31-60 days past due (18%), Greater than 61 days past due (60%). Since this is an estimate please round your final answer to the nearest whole dollar.
• Income taxes are estimated to be $237,800.

General JournalPage GJ1DateAccount/ExplanationFDebitCredit

General JournalPage GJ2DateAccount/ExplanationFDebitCredit

c)

What is the next step in the accounting cycle?

	Post adjusting entries
	Prepare a post-closing trial balance
	Prepare an adjusted trial balance
	Post closing entries
	Prepare an unadjusted trial balance
	Prepare closing entries
	Post transactions
	Analyze and journalize transactions
	Prepare financial statements
	This is the last step