NP_10e_Ch07_Solutions

NP_10e_Ch07_Solutions - P7-1 Unique Globe Inc 1 Bank...

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P7-1 Unique Globe, Inc. 1. Bank Reconciliation Unique Globe, Inc. Bank Reconciliation May 31, 2010 Bank balance, May 31 $53,451.46 Add: Deposits in transit $5,220.94 Bank charge deducted in error $750.00 $5,970.94 $59,422.40 Less: Checks outstanding $3,936.80 Adjusted bank balance, May 31 $55,485.60 Unadjusted book balance, May 31 $43,784.16 Add: Notes receivable collected by bank $12,000.00 Interest receivable collected by bank $200.00 Interest posted on average balance $250.00 $12,450.00 $56,234.16 Less: Check recorded incorrectly in check register $540.00 ($1,920 - $1,380) Bank service charge $30.00 NSF check from customer, Eve Lay $178.56 $748.56 Adjusted book balance, May 31 $55,485.60 4. Comments A bank reconciliation is an important internal control process that allows the company to monitor the integrity of its cash accounts. It also provides the company with an opportunity to determine the true cash balance for reporting purposes. Certain adjusting entries must be performed as a result of the bank reconciliation to bring affected ledger account balances to the correct amounts.
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2. Adjusting Entries 31-May Cash $12,200.00 Notes Receivable $12,000.00 Interest Receivable $200.00 Notes & interest collected by bank 31-May Cash $250.00 Interest Income $250.00 Interest posted by bank 31-May Merchandise Inventory $540.00 Cash $540.00 Correct inventory purchase transaction 31-May Bank Service Charges Expense $30.00 Cash $30.00 Bank service charge for May 31-May Accounts Receivable $178.56 Cash $178.56 NSF check from Eve Lay returned 3. Cash Balance, May 31 The cash balance for May 31 should be $55,485.60.
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P7-2 Moore Company 1. T Account Analysis Accounts Receivable
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