Mgmt 200 Assignment Soln 2-9-11

Mgmt 200 Assignment Soln 2-9-11 - Service charge − 200...

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Management 200 – Introductory Financial Accounting– Spring 2011 Krannert School of Management - Purdue University Solutions to class assignment for February 9, 2011 Additional Perspective 4-1 Requirement 1: Suzie should make deposits more often than once per month, such as each day or each time a major deposit is needed. Suzie should also reconcile the bank statement more than once every six months, such as once per month. Requirement 2: Great Adventures, Inc. Bank Reconciliation December 31, 2012 Bank’s Cash Balance Company’s Cash Balance Before reconciliation $50,500 Before reconciliation $64,200 Deposits outstanding +20,000 Interest earned + 500 Checks outstanding 6,000
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Unformatted text preview: Service charge − 200 After reconciliation $64,500 After reconciliation $64,500 Dec. 31, 2012 Debit Credit Cash 500 Interest Revenue 500 ( Reconcile cash increases ) Dec. 31, 2012 Service Charge Expense 200 Cash 200 ( Reconcile cash decreases ) Requirement 3: Failure to record the interest revenue would cause assets and revenues to be understated by $500. Failure to record the service charge expense causes expenses to be understated and assets to be overstated by $200. The net effect of both transactions is an understatement of assets by $300 and an understatement of stockholders’ equity (retained earnings) and net income by $300....
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This note was uploaded on 02/27/2012 for the course MGMT 200 taught by Professor Greigg during the Spring '08 term at Purdue.

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