financial accounting chapter 4 homework

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Financial accounting (4th Edition) Edit edition This problem has been solved: Solutions for Chapter 4 …

Bank Reconciliation statement

It is reconciliation between bank statement and cash general ledger of books. This should always be matched. If reconciliation is started with bank balance then pending checks and deposits should be affected and if reconciliation started with company's balance then remaining revenue and expenditures should be taken into consideration.

S should make deposits more often than once per month, such as each day or each time a major deposit is needed. S should also reconcile the bank statement more than once every six months, such as once per month

Following is the bank reconciliation statement in the books of Great Adventures Inc. as on December 31, 2015.

Above statement is prepared using MS Excel with appropriate formula.

In the above statement, bank balance as per bank statement is $50,500 which should be added by outstanding deposits of $20,000 and reduce by outstanding checks of $6,000 so that bank balance as per reconciliation will be match by 64,500.

Same way company's cash balance as per general ledger is $64,200 which is added by interest earned by $500 and reduced by service fee of $200. Hence Company's balance as reconciliation will be match by $64,500.

The required journal entry for the record interest income.

Being revenue income amount should be credited to income statement hence interest income should be credited and cash balance increased hence cash account is debited by $500.

Being Service fees expenses should be debited to income statement hence service fee expenses should be debited and cash balance is decreased hence cash balance would be credited by $200.

Failure to record the interest revenue would cause assets and revenues to be understated by $500. Failure to record the service charge fee causes expenses to be understated and assets to be overstated by $200. The net effect of both transactions is understood of assets by $300 and understands of stockholder's equity and net income by $300.

Corresponding textbook

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Acc chapter 4 off - homework

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Course : Principles of Financial Accounting (ACG2021)

University : university of south florida.

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