Help I am stuck in the middle of this entry.
In June, Bill commented to you that he could never figure outhis bank statement, “it never matches the balance in my accountingrecords” he tells you. So you explain that a bank reconciliation isa tool used to balance the bank statement to the accounting books.He gives you his bank statement for June, 2014 (shown below). Thegeneral ledger shows a balance for the account cash of $14,319.00on June 30, 2014 (detail transactions below). Bill’s business onlyhas one checking account and no other cash accounts.
Bill has begun to have problems collecting some of his creditaccounts and is considering writing off a couple of customeraccount balances. He asks you how these bad debts should berecorded and has asked you to begin recording bad debt using theallowance method for June, 2014. Selected account balances at theend of June, 2014 are:
Sales $7,200
Sales on Credit $2,900
Accounts Receivable $3,200
As a result of increased focus on collecting accountsreceivable, Bill has decided to extend credit for one customer,Alan Jones, who owes Bill’s Lawn Care $500. Bill and Alan haveagreed to a 90-day 6% note for $500 issued on June 5, 2014.
Instructions:
Using the bank statement and the general ledger, prepare a bankreconciliation for Bill’s Lawn Care as of June 30, 2014. Record thenecessary journal entries to adjust the books for the appropriatereconciling items.Start with Page 6 for thejournal entries.Explanations are optional.
Using the information given above, calculate the amount of baddebt using:
Percentage of Sales on Credit = 1.5%
Percentage of Accounts Receivable = 1%
Using the chart of accounts, record the journal entry for baddebt expense for Bill’s Lawn Care using the percentage ofsales on credit method.
Using the note receivable information above and the chart ofaccounts, record the following entries in the general journal(continue these entries on Page 6):
Receipt of the note in payment of the accounts receivablebalance.
Adjusting entry at the end of June, 2014 for the notereceivable. (Round interest calculations to two decimals)
Assume that Alan pays the note and interest in full on the duedate, record the necessary journal entry.Assume that interest hasbeen accrued at the end of each month.
Assume that Alan defaults on the note and interest on the duedate, record the necessary journal entry.Assume that interest hasbeen accrued at the end of each month.
Please note that the calculation pages in the Excel templateare required . Please show your work on those pages.
CHECKING ACCOUNT DETAIL:
|
DATE |
TRANSACTION TYPE & NUMBER |
AMOUNT |
BALANCE |
|
BEGINNING BALANCE |
|
|
$12,850.00 |
|
6/2/2014 |
CHECK #1570 |
226.00 |
12,624.00 |
|
6/5/2014 |
CHECK #1571 |
83.00 |
12,541.00 |
|
6/6/2014 |
EFT #43 |
127.00 |
12,414.00 |
|
6/10/2014 |
DEPOSIT #104 |
1,550.00 |
13,964.00 |
|
6/15/2014 |
CHECK #1572 |
145.00 |
13,819.00 |
|
6/15/2014 |
CHECK #1573 |
185.00 |
13,634.00 |
|
6/20/2014 |
DEPOSIT #105 |
885.00 |
14,519.00 |
|
6/24/2014 |
EFT #44 |
143.00 |
14,376.00 |
|
6/28/2014 |
CHECK #1574 |
87.00 |
14,289.00 |
|
6/28/2014 |
CHECK #1575 |
95.00 |
14,194.00 |
|
6/30/2014 |
DEPOSIT #106 |
425.00 |
14,619.00 |
|
6/30/2014 |
CHECK #1576 |
155.00 |
14,464.00 |
|
6/30/2014 |
CHECK #1577 |
145.00 |
$14,319.00 |
BANK STATEMENT:
|
FIRST NATIONAL BANK |
|
|
|
ACCOUNT SUMMARY JUNE 30, 2014 |
|
|
|
BEGINNING BALANCE |
$12,850.00 |
|
|
PAYMENTS |
$1,021.00 |
|
|
DEPOSITS |
2,440.00 |
|
|
FEES |
20.00 |
|
|
ENDING BALANCE |
$14,249.00 |
|
|
PAYMENTS |
|
|
|
DATE |
REFERENCE |
AMOUNT |
|
6/5/2014 |
1570 |
$266.00 |
|
6/9/2014 |
1571 |
83.00 |
|
6/10/2014 |
43 |
127.00 |
|
6/19/2014 |
1572 |
145.00 |
|
6/28/2014 |
1573 |
185.00 |
|
6/28/2014 |
NSF |
120.00 |
|
6/30/2014 |
1575 |
95.00 |
|
TOTAL PAYMENTS |
|
$1,021.00 |
|
DEPOSITS |
|
|
|
DATE |
REFERENCE |
AMOUNT |
|
6/11/2014 |
104 |
$1,550.00 |
|
6/23/2014 |
105 |
885.00 |
|
6/30/2014 |
INTEREST |
5.00 |
|
TOTAL DEPOSITS |
|
$2,440.00 |
|
FEES |
|
|
|
6/30/2014 |
SVC CHG |
$20.00 |
|
TOTAL FEES |
|
$20.00 |
Additional Information:Check #1570 waswritten for $266.00, but was recorded incorrectlyin the general ledger. The check was for fuel.
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