Question 1

Bank reconciliation and entries

The cash account for Stone Systems at July 31, 20Y5, indicated a balance of $7,595. The bank statement indicated a balance of $10,170 on July 31, 20Y5. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:

1. Checks outstanding totaled $3,660.
2. A deposit of $3,810, representing receipts of July 31, had been made too late to appear on the bank statement.
3. The bank had collected $1,980 on a note left for collection. The face of the note was $1,880.
4. A check for $800 returned with the statement had been incorrectly recorded by Stone Systems as $880. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account.
5. A check drawn for $800 had been incorrectly charged by the bank as $80.
6. Bank service charges for July amounted to $55.

Required:

Question Content Area

1. Prepare a bank reconciliation.

Stone Systems Bank Reconciliation July 31, 20Y5

Line Item Description	Amount	Amount
Cash balance according to bank statement	blank	$Cash balance according to bank statement
Add: Bank service chargesAdd: Deposit in transit on July 31Add: Error in recording check by Stone SystemsAdd: Note collected by bank, including $100 interestAdd: Outstanding checks		- Select -
Deduct: Bank service chargesDeduct: Deposit in transit on July 31Deduct: Error in recording check by Stone SystemsDeduct: Note collected by bank, including $100 interestDeduct: Outstanding checks	$- Select -
Deduct: Bank error in charging check as $80 instead of $800Deduct: Bank service chargesDeduct: Deposit in transit on July 31Deduct: Error in recording check by Stone SystemsDeduct: Note collected by bank, including $100 interest	- Select -	blank
Total deductions	blank	Total deductions
Adjusted balance	blank	$Adjusted balance
Cash balance according to company's records	blank	$Cash balance according to company's records
Adjustments:	blank	blank
Add: Bank error in charging check as $80 instead of $800Add: Bank service chargesAdd: Deposit in transit on July 31Add: Note collected by bank, including $100 interestAdd: Outstanding checks	$- Select -
Add: Bank error in charging check as $80 instead of $800Add: Bank service chargesAdd: Deposit in transit on July 31Add: Error in recording check by Stone SystemsAdd: Outstanding checks	- Select -	blank
Total additions	blank	Total additions
Deduct: Bank service chargesDeduct: Deposit in transit on July 31Deduct: Error in charging check as $80 instead of $800Deduct: Note collected by bank, including $100 interestDeduct: Outstanding checks	blank	- Select -
Adjusted balance	blank	$Adjusted balance

Question Content Area

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. If an amount box does not require an entry, leave it blank.

Date	Account	Debit	Credit
20Y5 July 31	CashInterest ReceivableInterest RevenueNotes ReceivablePetty Cash	- Select -	- Select -
	CashInterest PayableInterest ReceivableNotes PayableNotes Receivable	- Select -	- Select -
	CashInterest PayableInterest ReceivableInterest RevenueUnearned Interest	- Select -	- Select -
	Accounts Payable-Holland Co.Accounts Receivable-Holland Co.CashCash Short or OverNotes Payable	- Select -	- Select -
July 31	Accounts Receivable-Holland Co.CashMiscellaneous ExpenseNotes PayablePetty Cash	- Select -	- Select -
	Accounts PayableAccounts ReceivableCashMiscellaneous Administrative ExpensePetty Cash	- Select -	- Select -

Question Content Area

3. If a balance sheet were prepared for Stone Systems on July 31, 20Y5, what amount should be reported as cash? fill in the blank 1 of 1$

Question 2

Note receivable

Prefix Supply Company received a 120-day, 6% note for $500,000, dated April 12 from a customer on account. Assume 360-days in a year.

Question Content Area

a. Determine the due date of the note.

August 10April 21July 31June 30May 31August 10

b. Determine the maturity value of the note. fill in the blank 1 of 1$

Feedback Area

Feedback

The due date is the date the note is to be paid.

Assume a 360-day year. The maturity value is the amount that must be paid at the due date of the note.

Question Content Area

c. Journalize the entry to record the receipt of the payment of the note at maturity. If an amount box does not require an entry, leave it blank.

blank	Account	Debit	Credit
blank	CashInterest ReceivableInterest RevenueNotes ReceivableNotes PayableCash	Cash	Cash
	Accounts ReceivableCashInterest ReceivableNotes ReceivableNotes PayableNotes Receivable	Notes Receivable	Notes Receivable
	CashInterest ReceivableInterest RevenueInterest PayableNotes PayableInterest Revenue	Interest Revenue	Interest Revenue