The bank statement of Gear Supplies included a $300 NSF check that one of Gear's customers had
Question:
The bank statement of Gear Supplies included a $300 NSF check that one of Gear's customers had written to pay for services that were provided by Gear.
Required
a. Show the effects of recognizing the NSF check on the financial statements by recording the appropriate amounts in a horizontal statements model like the following one.
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b. Is the recognition of the NSF check on Gear's books an asset source, use, or exchange transaction?
c. Suppose the customer redeems the check by giving Gear $325 cash in exchange for the bad check. The additional $25 paid a service fee charged by Gear. Show the effects on the financial statements in the horizontal statements model in Requirement a.
d. Is the receipt of cash referred to in Requirement c an asset source, use, or exchangetransaction?
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Step by Step Answer:
a c Gear Supplies Statements Model Assets Liab S Equity Rev Exp Net Inc Cash Flow C...View the full answer
