Question 1 (31 marks) Part I (20 marks) 3-D Cake Shop engages business in selling special design cakes. The Company adjusts its accounts monthly. Below are the cash account in the Company's accounting records and the Company's bank statement received from Kowloon Bank for September 2020. 3-D Cake Shop Cash account $ 2020 121,410 Sep 2020 Aug 31 Balance $ 2,180 5 Sep 1-30 Deposits 115,050 Sep 75,595 Sep 16 33,410 Check written (no. 12382) Check written (no. 12383) Check written (no. 12384) Check written (no. 12385) Check written (no. 12386) Sep 28 5,780 Sep 30 460 Sep 30 Balance 119,035 Kowloon Bank 3-D Cake Shop - Bank Statement 2020 Aug Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep 31 7 8 16 17 19 29 29 30 30 30 30 Balance Deposits Check no. 12382 Deposits Check no. 12383 Check no.12384 NSF check - Mr. Yuen (a customer) Direct credit from a customer Note and interest collected Deposits Bank charges Balance $ 121,410 62,620 (2,180) 18,940 (75,595) (34,140) (1,080) 550 26,160 20,950 (80) 137,555 Additional information: 1. No deposit-in-transit and outstanding check were carried forward from last month. 2. The check no. 12384 was written to pay for the utilities expenses and the amount was wrongly recorded in the Company's record. 3. The note and interest collected by the bank represented a $24,000 12% nine- month note receivable issued on 1 January 2020. The principal and accrued interest was due and paid on 30 September 2020. Required: (a) Prepare a bank reconciliation statement as at 30 Sep 2020. (12 marks) (b) Prepare the reconciling journal entries that should be made in the accounting records of 3-D Cake Shop. (8 marks) 2 NW Company (NW) is engaged in the purchases and sales of high quality ear phones. All purchases and sales are on credit. The Company adopts perpetual inventory system and closes its account annually on 31 December. The following information was extracted from the unadjusted trial balance as at 30 November 2019: Debit Credit $ $ Sales 4,250,000 Sales returns 120,000 Cost of goods sold 2,800,000 Sales discounts 16,000 Inventory 740,000 Purchase discounts taken 32,000 The following transactions occurred in December 2019: 1 Dec NW purchased $180,000 inventory from Raymond Company, 3 Dec NW sold goods to Gloria Company at $80,000. Gross profit rate is 30%. 7 Dec NW sold goods to Athena Company at $150,000. Gross profit rate is 40%. 11 Dec NW returned $20,000 inventory to Raymond Company due to incorrect model. Athena returned $30,000 ear phones to NW due to incorrect brand. 12 Dec 23 Dec NW paid to Raymond Company in full regarding to purchase in December. 31 Dec NW received a 5% 6-month notes receivable from Athena Company for full settlement as Athena's accounts receivable regarding to sales in December NW conducted physical count of inventory and revealed $750,000 inventory was on hand. 31 Dec Required: Prepare journal entries for NW Company for the above transactions in December 2019
