Purchase Solution

# Trial Balance-adjusting entries; Bank Reconciliation

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The trial balance of Ramsey Company shows the following balances for selected accounts on November 30, 2003:
Prepaid Insurance \$10,000 Unearned Revenue \$ 2,400
Equipment 60,000 Notes Payable 20,000
Accumulated Depreciation 6,600 Interest Payable 400

Instructions: Using the additional information given below, prepare the appropriate monthly adjusting entries at November 30. Show computations.

A. Revenue for services rendered to customers, but not yet billed, totaled \$6,000 on November 30.
B. The note payable is a 12%, 1 year note issued September 1, 2003.
C. The equipment was purchased on January 2, 2002, for \$60,000. It has an estimated life of 10 years and an estimated salvage value of \$6,000. Ramsey uses the straight-line depreciation method.
D. An insurance policy was acquired on June 30, 2003; the premium paid for 2 years was \$12,000.
E. Ramsey received \$2,400 revenue in advance from a customer on November 1, 2003. Three-fourths of this amount was earned by November 30.

BANK RECONCILIATION
A review of the November 30 bank statement and other data of James Company reveals the following:

1. Balance per bank statement on November 30 \$18,800
2. Balance per books on November 30 \$12,458
3. NSF Check from J. Smith in payment of account \$320
4. Collection of \$4,500, 4-month, 12% note with a \$45 collection fee. No interest
5. Deposits in transit at November 30 3,200
6. Outstanding checks at November 30 5,400
7. A check written by James to Green for equipment on November 10 was
recorded at \$463 but correctly cleared the bank at \$436.
8. A check drawn on the account of Jomes Company for \$200 was mistakenly
charged against James' account by the bank.

Instructions: Prepare the November 30 (a) bank reconciliation (omit heading) and (b) related journal entries.

(a) BANK RECONCILIATION:
Amount Amount
Balance per bank statement \$18,800 Balance per books \$12,458

(b) ENTRIES:
Account Titles Debit Credit

##### Solution Summary

Prepares the monthly adjusting entries and bank reconciliation and related journal entries.

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