Teresina Video SA

Bank Reconciliation

Cash Balance Per Bank Cash Balance Per Books

Add: Add:

Less: Less:

Adjusted Cash Balance Per Bank: Adjusted Cash Balance Per Books:

(b) Adjusting Entries

 (a) Aglife Genetics
Bank Reconciliation
May31, 2017

Cash Balance Per Bank Cash Balance Per Books

Add: Add:

Less: Less:

Adjusted Cash Balance Per Bank: Adjusted Cash Balance Per Books:

(b) Adjusting Entries:

 Dareen Food Store developed the following information in recording its bank statement for the
month of March.
Balance per books March 31 $ 2,905
Balance per bank statement March 31 $10,900
———————————————————————————————————————————
(1) Checks written in March but still outstanding $6,000.
(2) Checks written in February but still outstanding $2,800.
(3) Deposits of March 30 and 31 not yet recorded by bank $5,200.
(4) NSF check of customer returned by bank $1,200.
(5) Check No. 210 for $594 was correctly issued and paid by bank but incorrectly entered in the
cash payments journal as payment on account for $549.
(6) Bank service charge for March was $50.
(7) A payment on account was incorrectly entered in the cash payments journal and posted to the
accounts payable subsidiary ledger for $824 when Check No. 318 was correctly prepared for
$284. The check cleared the bank in March.
(8) The bank collected a note receivable for the company for $4,000 plus $150 interest revenue.
(9) The bank collected an electronic fund transfer of $1000.
Instructions
Prepare a bank reconciliation at March 31.
(7,300)

Add: Add:

Less: Less:

Adjusted Cash Balance Per Bank: Adjusted Cash Balance Per Books:
In preparing its August 31, 2014 bank reconciliation, Acme Corp. has the following information available.

Balance per bank statement, 8/31/14 $19,650

Deposit in transit, 8/31/14 3,900

Return of customer’s check not sufficient funds, 8/30/14 600

Outstanding checks, 8/31/14 2,750

Bank service charges for August 100

At August 31, 2014, Acme’s adjusted cash balance is

a. $20,800.
b. $20,200.
c. $20,100.
d. $18,500.
128. Each of the following items affect the cash balance per books except

a. bank service charges.

b. notes collected by the bank.
c. NSF checks.
d. outstanding checks.

130. Wynn Company developed the following reconciling information in preparing its September bank
reconciliation:
Cash balance per bank statement, 9/30 $18,000
Note receivable collected by bank 8,000
Outstanding checks 12,000
Deposits in transit 6,000
Bank service charge 100
NSF check 1,600
Determine the cash balance per books (before adjustments) for Wynn Company.

a. $13,700.
b. $24,000.
c. $5,700.
d. $20,000.
142. Tayler Company wrote checks totaling $34,160 during October and $37,300 during November. $32,480
of these checks cleared the bank in October, and $36,440 cleared the bank in November. What was the
amount of outstanding checks on November 30?

a. $2,540
b. $460
c. $1,220
d. $3,960
Chapter 8
Accounting for Receivables

Accounts Receivable Notes Receivables Other Receivables

Amounts owed by Claims for which formal Various forms of non-
customers on account instruments are issued as trade receivables not
proof of the debt part of operations.
(30-60days)
(60-90days) eg. Interest receivable and
income taxes refundable

Accounting issues Associated with Accounts Receivables are:

1. Recognizing Accounts receivables
2. Valuing Accounts receivables
3. Disposing of Accounts Receivables

1.Recognizing A/R: the periodic way is as follow or the perpetual way previously studied in Chapter5
To record sales To record return Payment within discount

A/R XX SALES R&A XX Cash XX

Sales Revenue XX A/R XX Sales Discount XX
A/R XX

2. Valuing A/R:
Determining the amount of A/R to report may be difficult because some receivables will become
Uncollectable. Companies record credit losses & debits to Bad Debt Expense or Uncollectable Account
expense.

There are 2 methods to calculate bad debt expense:

1. Direct write off method

2. Allowance Method

Percentage of Receivables
 The direct write off method Allowance method
When a company determines a particular Estimating uncollectable amounts at the end of each period
account to be uncollectible it charges the
loss to bad debt expense.

• Its used for insignificant % of Receivables

amounts
1.The company prepares an aging schedule
• The method doesn't match
bad debt expense to sales 2. It determines the expected bad debt losses be
revenue in the Income applying % of the past experience to find the
Statement desired balance in All.D.A
• Entry:
3. Adjusting entry:
bad debt expense xx Bad debt exp. XX
A/R xx All.D.A XX
XX= (Required balance + DR. or – CR. Beg.
balance in the ADA)
* All.D.A =Allowance for Doubtful accounts
Is a contra Receivables account

3. Recording the write off of an uncollectible Account

All.D. Acc. XX
A/R XX

4.Recovery of an Uncollectable Account: (2 entries)

a. Reverse b. Journalize the

A/R XX collection

All.D.A XX cash XX
A/R XX

3. Disposing of A/R:
Companies may sell their receivables to another companies for cash to shorten the cash to cash
operating cycle for two reasons : a. They may be the only reasonable source for cash
b. Billing and collection is time consuming
a. Sale of A/R b. Credit card sales

Cash XX Cash XX
Service charge expense XX Service charge expense XX
A/R XX Sales XX
 Notes Receivable (promissory note)
Determining the Maturity Date:
Counting the months from the date of issue (omit the day of issuance and include due date)
e.g. 3 month note issued May 1 → Maturity date is August 1
2 month note issued July 31 → Maturity date is September 30

Computing Interest:
Face Value of N/R X Annual i% X Time in terms of years

1. Recognizing Notes receivables (N/R should be recorded @ face value)

N/R XX Or N/R XX
A/R XX Sales XX
2. Valuing Notes receivables (Same as A/R)

3. Disposing of Notes Receivables

Honor of N/R
Maker pays it in full @ maturity date
If payment before the ending of If payment after the ending of accounting period
the accounting period
1. Adjusting Entry @ end of period
Entry @ maturity date:
Interest Receivable XX
Cash XX
Interest Revenue XX
N/R XX
2. Entry @ maturity date:
Int. Rev XX
Cash XX
N/R XX
Interest Receivable XX
Interest Revenue XX  remaining interest

Dishonor of N/R
If note isn't paid in full @maturity date
If expect future payment(with hope) If no hope of collection
A/R XX All. D. A XX
N/R XX N/R XX
Interest Rev. XX

Account Dr. Cr.

Ex. 232
Kosko Furniture Store has credit sales of $400,000 in 2014 and a debit balance of $600 in the Allowance for
Doubtful Accounts at year end. As of December 31, 2014, $130,000 of accounts receivable remain
uncollected. The credit manager prepared an aging schedule of accounts receivable and estimates that
$4,000 will prove to be uncollectible.

On March 4, 2015, the credit manager authorizes a write-off of the $1,000 balance owed by A. Noonan.

Instructions
(a) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2014.
(b) Show the statement of financial position presentation of accounts receivable on December 31, 2014.
(c) On March 4, before the write-off, assume the balance of Accounts Receivable account is $140,000 and
the balance of Allowance for Doubtful Accounts is a credit of $2,000. Make the appropriate entry to
record the write-off of the Noonan account. Also show the statement of financial position presentation of
accounts receivable before and after the write-off.
Ans: N/A, LO: 3, Bloom: AN, Difficulty: Medium, Min: 20, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem
Solving, IMA: FSA

Solution 232 (20 min.)

(a) Bad Debt Expense ($4,000 + $600) .............................................. 4,600
Allowance for Doubtful Accounts ......................................... 4,600

(b) Accounts Receivable ..................................................................... $130,000

Less: Allowance for Doubtful Accounts......................................... 4,000 $126,000

(c) Allowance for Doubtful Accounts ................................................... 1,000

Accounts Receivable—A. Noonan....................................... 1,000

Before Write-off After Write-off

Accounts Receivable $140,000 $139,000
Less: Allowance for Doubtful Accounts 2,000 1,000
Cash Realizable Value $138,000 $138,000