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Chapter 7: Q-7-6TI (page 403)

Question: For each of the following items, determine whether the item would be:

a. added to the bank balance

b. subtracted from the bank balance

c. added to the book balance

d. subtracted from the book balance

11. Interest revenue earned

12. NSF check

13. Deposit in transit

14. Service charge

15. Outstanding check

Short Answer

Expert verified

Answer:

11)added to the book balance

12) subtracted from the book balance

13) added to the bank balance

14) subtracted from the book balance

15) subtracted from the bank balance

Step by step solution

01

Definition of outstanding check

Outstanding checks are those checks that are not presented for the payment.

02

Whether the item is added or subtracted

11. Interest revenue is revenue that increases the balance of the company. Hence, it is added to the book balance.

12. NSF check means checks that do not have sufficient balance in the account. Hence, these checks are deducted from the book balance.

13. Deposit in transit is the balance deposited into the bank but not recorded by the bank; hence, this amount is added to the bank balance.

14. Service charges are the charges collected by the bank hence, it deducted from the book balance as it is not recorded in book balance.

15. Outstanding check is the check that is issued but not presented for the payment. Outstanding checks are deducted from the bank balance.

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Most popular questions from this chapter

What are some common controls used with a bank account?

What is a bank reconciliation?

Using Excel for a Bank Reconciliation

Download an Excel template for this problem online in MyAccountingLab or athttp://www.pearsonhighered.com/Horngren.

Lori Anders of Wilderness Associates is getting ready to prepare the October bank reconciliation.

The cash balance on the books of Wilderness Associates on October 31 is \(3,546.

Lori reviews the bank statement, and notes the checking account balance at October 31 is \)2,445. The bank statement also

reveals that the bank collected a note receivable on behalf of Wilderness Associates—the principal was \(1,500 and the interest

was \)15. One customer’s check for \(29 was returned by the bank for insufficient funds. Two additional items on the bank statement

were the monthly EFT for the utilities, \)250, and the bank service fee of \(12. Lori notes that the cash deposit made on

October 31 of \)3,300 does not appear on the statement, and that three checks totaling $975 had not cleared the bank account

when the bank statement was prepared.

Requirements

1. Prepare the bank reconciliation for Wilderness Associates at October 31, 2018. Format appropriate cells with dollar signs and double

underlines. Use Excel formulas to calculate subtotals and totals.

2. Journalize the entries based on the bank reconciliation. For dollar amounts, use cell references on bank reconciliation

Journalizing credit card sales 2018

Sep. 1 Recorded National Express credit card sales for \(96,000, net of processor fee of 1%. Ignore Cost of Goods Sold.

15 Recorded ValueMax credit card sales of \)80,000. Processor charges a 1.5% fee. ValueMax charges the fee at the end of the month, therefore Marathon uses the gross method for these credit card sales. Ignore Cost of Goods Sold.

30 ValueMax collected the fees for the month of September. Assume the

September 15 transaction is the only ValueMax credit card sale. Journalize all entries required for Marathon Running Shoes.

List internal control procedures related to e-commerce.
See all solutions

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