Springtime Corporation $($SC$)$ manufactures parts for the lawnmower industry. SC is a private company

that follows ASPE and has a December $31$ year end. SC uses the straight$-$line method to amortize any

discounts or premiums on notes receivable. Mrs$.$ Daisy, the owner of the company, has asked you to

review the accounts listed below to ensure the financial statements are in accordance with ASPE.

SC$\text{'}$s trial balance shows the following selected account balances at December $31,2016$:

$C{r}_{?}.$

Allowance for doubtful accounts

$$4,000$

Mrs$.$ Daisy provided the following additional information:

a$)$ The December $31,2016$ bank statement has just arrived in the mail, and it contains the following

information:

Ending cash balance

Bank charges

NSF cheque from Tractor Trouble Inc.

Interest paid by the bank

$$30,399$

$26$

$5,400$

$635$

From the records of SC at December $31,2016,$ you determine that there were unrecorded deposits of

$$21,000$ and outstanding cheques of $$3,936.$ Cheque number $12$ was recorded correctly by SSC for the

amount of $$882,$ but was shown as $$828$ on the bank statement. The NSF cheque relating to Tractor

Trouble Inc. was due to bankruptcy. Mrs$.$ Daisy has been advised that no amount of the receivable

$($which was $$5,400$ before this payment was received$)$ from Tractor Trouble Inc. will be collected. You

realize that a bank reconciliation will be necessary, as Mrs$.$ Daisy does not know how to prepare one.

b$)$ On September $1,2016,$ SC factored accounts receivable totalling $$20,000$ to DT Trust Ontario Bank

with recourse. DT will receive collection from these specific customers and has retained $5\%$ to cover

probable adjustments. SC is assessed a $3\%$ finance charge, and has an estimated recourse obligation of

$$3,000.$ Mrs$.$ Daisy handed you an envelope containing the cash she received in this deal, because she

had no idea what to do with it at year end.

c$)$ On October $1,2016,$ SC sold some of its products to Grass Is Us and accepted a three year $$30,000$

zero$-$interest bearing note as payment. The market rate for Grass Is Us is $6\%$ and the present value of

the note is $$25,189.$ Mrs$.$ Daisy has recorded the note receivable at face value.Question $1($continued$)$

d$)$ At December $31,$ SC has determined that the allowance for doubtful accounts should be $5\%$ of

accounts receivable.

Required:

Prepare a bank reconciliation in good form to the correct balance as at December $31,2016.$

For each item above, prepare all of the necessary journal entries and adjusting journal entries.

Show all calculations and round all numbers to the nearest cent.