*"the work should be in your own words"*

QI- What is a bank reconciliation and why is it important for companies to do it periodically? A bank reconciliation is the process of matching information regarding cash accounts from accounting records to the corresponding information on bank statements. Simply put, a reconciliation is how a business makes sure it has the cash it thinks it has. The bank reconciliation is important for companies to make it periodically because it: Helps in identifying any unusual transactions that might be caused by fraud or accounting errors. 2. Helps is determining the amount of cash at bank that should be reported in the balance sheet. 2. Helps in determining the discrepancies between cash balance per books and cash balance per bank statement Prepare a Bank Reconciliation Statement for XYZ company that has: Bank statement of S9,000 Cash account of $7,500. Additional information for the reconciliation: Deposit in transit NSF Check Outstanding check. Collections made by the bank. Required: provide an amount of each information to bring the adjusted balances to be equal (2 Marks). Answer: XYZ company Bank Reconciliation Bank Balance 9,000 Add: Deposit in transit Less: outstanding checks -3000 Adjusted balance 2000 8,000 Book Balance 7.500 Add: Collection made by bank | 2.500 Less: NSF Checks -2,000 Adjusted Balance 8,000 Q2- Assume that you have a company. And the management estimates that 2.5% of sales will be uncollectible. Provide an amount of sales and prepare the journal entry using the percent of sales method (i Mark). Answer: Bad debt expenses ($200,000 X 2.5%) 5,000 Allowance for doubtful accounts 5,000 Q3- Q3 A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory (2 Marks). January 1: Purchased 100 units at SAR 10 per unit February. Purchased 60 units at SAR 12 per unit March 16: Sold 40 Units for SAR 16 per unit Prepare general journal entries to record the March 16 sale using the - FIFO inventory valuation method. Cash (40XSAR16) 640 Sales Revenue 640 Cost of goods sold (40 SAR10) 400 Merchandise inventory 400 640 . LIFO inventory valuation method. Cash (40XSAR16) Sales Revenue Cost of goods sold (40XSAR12) Merchandise inventory 640 480 480