Q.9

Hans Supplies bank statement contained a $360 NSF check that one of its customers had written to pay for supplies purchased. Required a. Show the effects of recognizing the NSF check on the financial statements by recording the appropriate amounts in a horizontal statements model like the following one: (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity and NA to indicate the element is not affected by the event. Enter any decreases to account balances with a minus sign.)

HAN'S SUPPLIES Statements Model Stockholders Revenue Equity Assets Liabilities Expense = Net Income Cash Flow Cash + Accounts * Receivable keceivable IOI D I b. Is the recognition of the NSF check on Han's books an asset source, use, or exchange transaction? Asset source Asset use Asset exchange c. Suppose the customer redeems the check by giving Han's $390 cash in exchange for the bad check. The additional $30 paid a service fee charged by Han's. Show the effects on the financial statements in the horizontal statements model. (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity and NA to indicate the element is not affected by the event. Enter any decreases to account balances with a minus sign.) HAN'S SUPPLIES Statements Model . Stockholders' Revenue Assets Liabilities + Equity - Expense - Net Income Cash Flow Cash . Accounts + Receivable d. Is the receipt of cash referenced in Requirement can asset source, use, or exchange transaction? $360 Asset exchange, $30 Asset source $360 Asset source, $30 Asset use $390 Asset use, $30 Asset source $360 Asset source, $30 Asset exchange $390 Asset exchange, $30 Asset source $360 Asset use, $30 Asset exchange e. Record in general journal form the adjusting entry for the NSF check and the entry for redemption of the check by the customer. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 Record entry for recognizing the NSF check. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal e. Record in general journal form the adjusting entry for the NSF check and the entry for redemption of the check by the customer. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the entry for redemption of check by the customer by giving $390 in cash to Han which includes an additional $30 service fee. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal