Prepare bank reconciliation and related entries.

E8.14 (LO 4) AN The following information (in millions) was taken from the December 31 financial statements of Canadian National Railway Company:

Calculate ratios and comment.

		2017		2016		2015
Accounts receivable, gross		$ 1,000		$ 903		$ 885
Allowance for doubtful accounts		16		28		7
Accounts receivable, net		984		875		878
Revenues		13,041		12,037		12,611
Total current assets		2,190		2,107		2,153
Total current liabilities		3,983		3,008		2,998

Instructions

1. Calculate the 2017 and 2016 current ratios.
2. Calculate the receivables turnover and average collection period for 2017 and 2016.
3. Comment on any improvement or weakening in CNs liquidity and its management of accounts receivable.

Additional information:

1. The bank statement contained three debit memoranda:

   • An NSF cheque of $595 that Yap had deposited was returned due to insufficient funds in the maker's bank account. This cheque was originally given to Yap by Mr. Jordan, a customer, in payment of his account. Yap believes it will be able to collect this amount from Mr. Jordan.
   • A bank loan payment (LN), which included $125 of interest and a $1,000 payment on the principal. (Hint: Use Notes Payable.)
   • A service charge (SC) of $49 for bank services provided throughout the month.
2. The bank statement contained one credit memorandum for $23 of interest (IN) earned on the account for the month.
3. The bank made an error processing cheque #3478. No other errors were made by the bank.

Yap's unadjusted cash balance per its general ledger on March 31 is $8,495. Yap's list of cash receipts and cash payments showed the following for March:

Cash Receipts			Cash Payments
Date	Amount		Date	Cheque No.	Amount
Mar. 5	$ 1,221		Mar. 3	3472	$ 1,427
10	1,745		4	3473	725
14	2,283		6	3474	2,330
20	1,832		7	3475	487
25	2,675		13	3476	1,828
31	1,025		14	3477	915
Total	$10,781		19	3478	1,380
			21	3479	159
			28	3480	1,679
			31	3481	862
			31	3482	1,126
			Total		$12,918

The bank portion of the previous month's bank reconciliation for Yap Co. at February 28, 2021, was as follows:

YAP CO. Bank Reconciliation February 28, 2021
Cash balance per bank				$12,742
Add: Deposits in transit				2,530
				15,272
Less: Outstanding cheques
#3451		$2,260
#3470		1,535
#3471		845		4,640
Adjusted cash balance per bank				$10,632

Instructions

a. Prepare a bank reconciliation at March 31.

b. Prepare the necessary adjusting entries at March 31. (Note: The correction of any errors in the recording of cheques should be made to Accounts Payable. The correction of any errors in the recording of cash receipts should be made to Accounts Receivable.)