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    Bank Reconciliation

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    The cash account in the general ledger of Hendry Corporation shows a balance of $96,990 at December 31, 2007 (prior to performing a bank reconciliation). The company's bank statement shows a balance of $100,560 at the same date. An examination of the bank statement reveals the following:

    1. Deposit in transit amount to $ 24,600
    2. Bank service charges total 200
    3. Outstanding checks total 31,700
    4. A $3600 check marked "NSF" from Kent Company (one of Hendry corporation's customers) was returned to Hendry Corporation by the bank. This was the only NSF check that Hendry Corporation received during 2007.
    5. A cancelled check (no. 244) written by Hendry Corporation in the amount of 1250 for office equipment was incorrectly recorded in the general ledger as a debit to Office Equipment of 1520 and a credit to cash of 1250.

    In addition to the above information, Hendry Corporation owns the following assets at December 31, 2007: 1) money market accounts totaling 75000, 2) 3000 high-grade, 90 day, commercial paper, and 3) highly liquid stock investment valued at 86000 at December 31, 2007 ( these investment originally cost Hendry Corporation 116000).

    On December 1, 2007, Hendry Corporation sold an unused warehouse to Moran Industries for $100,000. Hendry accepted a six month, 100000, 6 percent note receivable from Moran. The note, plus accrued interest, is due in full on May 31, 2008. Hendry Corporation adjust for accrued interest revenue monthly.

    Hendry Corporation uses the income statement approach to compute its uncollectible accounts expense. The general ledger had reported Accounts receivable of 2,150,000 at January 1, 2007. At that time, the Allowance for Doubtful Accounts had a credit balance of 40,000. Throughout 2007, the company wrote off actual accounts receivable of 140,000 and collected 21,213,600 on account from credit customers ( this amount includes the 3600 NSF check received from Kent Company). Credit sales for the year ended December 31, 2007, totaled $20,000,000. Of these credit sales, 2 percent were estimated to eventually become uncollectible.

    Instructions
    a. Prepare Hendry Corporation's Bank reconciliation dated December 31, 2007, and provide the journal entry necessary to update the company's general ledger balances.
    b. Compute cash and cash equivalents to be reported in Hendry Corporation's balance sheet dated December 31, 2007
    c. Prepare the adjusting entry necessary to account for the note receivable from Moran Industries at December 31, 2007.
    d. Determine the net realizable value of Hendry Corporation's accounts receivable at December 31, 2007
    e. Determine the total dollar amount of financial assets to be reported in Hendry Corporation's balance sheet dated December 31, 2007.
    f. Assume that it is normal for firms similar to Hendry Corporation to take an average of 45 days to collect an outstanding receivable. Is Hendry Corporation's collection performance above or below average?

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    The cash account in the general ledger of Hendry Corporation shows a balance of $96,990 at December 31, 2007 (prior to performing a bank reconciliation). The company's bank statement shows a balance of $100,560 at the same date. An examination of the bank statement reveals the following:

    1. Deposit in transit amount to $ 24,600
    2. Bank service charges total 200
    3. Outstanding checks total 31,700
    4. A $3600 check marked "NSF" from Kent Company (one of Hendry corporation's customers) was returned to Hendry Corporation by the bank. This was the only NSF check that Hendry Corporation received during 2007.
    5. A cancelled check (no. 244) written by Hendry Corporation in the amount of 1250 for office ...

    Solution Summary

    The solution explains how to prepare a bank reconciliation and the related adjusting entries

    $2.19

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