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Chapter 6: 6QS_b (page 306)

Nolan Company deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on June 30, 2017, its Cash account shows a \(22,352 debit balance. Nolan’s June 30 bank statement shows \)21,332 on deposit in the bank. Prepare a bank reconciliation for the company using the following information.
b. The June 30 bank statement lists $41 in bank service charges; the company has not yet recorded the cost of these services.

Short Answer

Expert verified

Answer

Bank service charges will be deducted by $41.

Step by step solution

01

Step-by-Step SolutionStep 1: Meaning of Bank Service Charges

Banks have given many services to their customers, and against that service, they charge some fees, and that fee is known as bank service charges.

02

Bank Reconciliation Statement-

Book Balance
Deduct:
Bank service charges	$41

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Most popular questions from this chapter

Barga Co. reported net sales for 2016 and 2017 of \(730,000 and \)1,095,000, respectively. Its year-end balances of accounts receivable follow: December 31, 2016, \(65,000; and December 31, 2017, \)123,000.

a. Compute its days’ sales uncollected at the end of each year. Round the number of days to one decimal.

For each of the following items a through g, indicate whether its amount (1) affects the bank or book side of a bank reconciliation, (2) represents an addition or a subtraction in a bank reconciliation, and (3) requires an adjusting journal entry.

Bank or Book Side Add or Subtract Adj. Entry or Not

b. Bank service charges . . . . . . . . . . . . . . . . . .

What are the limitations of internal controls?

Match each document in a voucher system in column one with its description in column two.

Document

1. Purchase requisition

2. Purchase order

3. Invoice

4. Receiving report

5. Invoice approval

6. Voucher

Description

A. An itemized statement of goods prepared by the vendor listing the customer’s name, items sold, sales prices, and terms of sale.

B. An internal file used to store documents and information to control cash disbursements and to ensure that a transaction is properly authorized and recorded.

C. A document used to place an order with a vendor that authorizes the vendor to ship ordered merchandise at the stated price and terms.

D. A checklist of steps necessary for the approval of an invoice for recording and payment; also known as a check authorization.

E. A document used by department managers to inform the purchasing department to place an order with a vendor.

F. A document used to notify the appropriate persons that ordered goods have arrived, including a description of the quantities and condition of goods.

Internal control procedures are important in every business, but at what stage in the development of a business do they become especially critical?

See all solutions

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