Question 1

Explain how and where accounts receivable are reported on the financial statements, and what the difference is between accounts receivable and notes receivable.

Question 2

John Snow's chequebook lists the following:

Date

Cheque #

Item

Cheque

Deposit

Balance

Nov

1

$505

4

622

Horizon Utility

$39

466

9

Dividends

$116

582

13

623

Canadian Tire

43

539

14

624

Petro-Canada

58

481

18

625

Cash

50

431

26

626

Faith of the Seven Church

25

406

28

627

Afforable Housing

275

131

30

Paycheque

746

877

The November bank statement shows:

Balance

$505

Add deposits

116

Deduct cheques

No.Amount

622$39

62343

62485

62550

Other charges:

NSF cheque

$8

Service charge

12

Balance

$384

Prepare John Snow's bank reconciliation at November 30th.

Question 3

Digital Solutions Inc is preparing its cash budget for 2016. Digital ended 2015 with cash of $81 million, and managers need to keep a cash balance of at least $75 million for operations.

Collections from customers are expected to total $11,284 million during 2016, and payments for the cost of services and products should reach $6,166 million. Operating expense payments are budgeted at $2,543.

During 2016, Digital expects to invest $1,825 million in new equipment and sell older assets for $115 million. Debt payments scheduled for 2016 will total $597 million. The company forecasts net income of $890 million for 2016 and plans to pay dividends of $338.

Prepare Digital Solutions cash budget for 2016. Will the budgeted level of cash receipts leave Digital with the desired ending cash balance of $75 million, or will the company need additional financing? If it does, how much will it need? Please prepare a cash budget.

Question 4

The October 31 bank statement of Spooky Halloween Costumes Ltd. (SHC) has just arrived from TD Bank. To prepare the SHC bank reconciliation, you gather the following data:

• SHC's Cash account shows a balance of $2,256.14 on October 31.
• The October 31 bank balance is $4,023.05.
• The bank statement shows that SHC earned $38.19 of interest on its bank balance during October. This amount was added to SHC's bank balance.
• SHC pays utilities of $250 and insurance of $100 by EFT.
• The following SHC cheques did not clear the bank by October 31: Cheque #
• Amount
• 237
• $46.10
• 288
• 141.00
• 291
• 578.05
• 293
• 11.87
• 294
• 609.51
• 295
• 8.88
• 296
• 101.63
• The bank statement includes a donation of $850, electronically deposited to the bank for SHC.
• The bank statement lists a $10.50 bank service charge.
• On October 31, the SHC treasurer deposited $16.15, which will appear on the November bank statement.
• The bank statement includes a $300 deposit that SHC did not make. The bank added $300 to SHC's account for another company's deposit.
• The bank statement includes two charges for returned cheques from donors. One is a $395 cheque received from a donor with the imprint "Unauthorized Signature." The other is a nonsufficient funds cheque in the amount of $146.67 received from a client.

Prepare the bank reconciliation for SHC.

Journalize the October 31 transactions needed to update SHC's Cash account. You do not need to include an explanation for each entry