E8-11 Prepare bank reconciliation and adjusting entries

The following information pertains to Crane Video Company.

1 Cash balance per bank, July 31, $7,263.
2 July bank service charge not recorded by the depositor $28.
3 Cash balance per books, July 31, $7,284.
4 Deposits in transit, July 31, $1,300.
5 Bank collected $700 note for Crane in July, plus interest $36, less fee $20. The
collection has not been recorded by Crane, and no interest has been accrued.
6 Outstanding checks, July 31, $591.

Instructions
(a) Prepare a bank reconciliation at July 31.
(b) Journalize the adjusting entries at July 31 on the books of Crane Video Company.

a. Bank reconciliation at July 31

Cash Balance per Bank Statement $7,263

Add: Deposit in transit $1,300
Less: Outstanding check $591 ($591)

Adjusted cash balance per bank $7,972

Cash Balance per Books $7,284

Add: Collection of notes receivable for
$700 plus interest earned $36 $736
less Collection fee $20 $20 $716
$8,000
Less: Bank Service Charge $28 ($28)

Adjusted cash balance per books $7,972

ee $20. The
n accrued.

deo Company.

b. Adjusting Entries

Date Account Titles Debit

July, 31 Cash $716
Miscellaneous Expense $20
Notes Receivable
Interest Revenue
(to record N/R $700 plus interest $36 less Collection fee $20

July, 31 Miscellaneous Expense $28

Cash
(to record bank service charge)
Credit

$700
$36

$28
P9-3A Journalize entries to record transactions related to bad debts
Presented below is an aging schedule for Halleran Company.

Number of Days Past Due

Customer Total Not yet Due 1-30 31-60 61-90 Over 90

Anders $ 22,000 $ 10,000 $ 12,000
Blake 40,000 $ 40,000
Coulson 57,000 16,000 6,000 35,000
Deleon 34,000 34,000
Others 132,000 96,000 16,000 14,000 6,000
$ 285,000 $ 152,000 $ 32,000 $ 26,000 $ 35,000 $ 40,000
Estimated
Percentage
Uncollectible 3% 6% 13% 25% 50%
Total
Estimated
Bad Debts $ 38,610 $ 4,560 $ 1,920 $ 3,380 $ 8,750 $ 20,000

At December 31, 2017, the unadjusted balance in Allowance for Doutful Accounts is a credit of $12,000.
Instructions:
(a) Journalize and post the adjusting entry for bad debts at December 31, 2017.
(b) Journalize and post the allowance account the following events and transactions in the year 2018.
(1) On March 31, a $1,000 customer balance originating in 2017 is judged uncollectible.
(2) On May 31, a check for $1,000 is received from the customer whose account was written off as uncollectible
on March 31.
( c) Journalize the adjusting entry for bad debts on December 31, 2018, assuming that the unadjusted balance in
the Allowance for Doubtful Accounts is a debit of $800 and the aging schedule indicates that total estimated bad
debts will be $31,600.

a.
 Halleran Company
Adjusting Entry
Date Account tittles Ref Debit Credit
Dec. 31 2017 BadDebts Expense ($38,610 - $12,000) $26,610
Allowance for Doubtful Accounts $26,610

Halleran Company
Ledger Accounts
Bad Debts Expense
Date Explanation Ref Debit Credit
Dec. 31 2017 Adj. $26,610

Allowance for Doubtful Account

Date Explanation Ref Debit Credit Balance
Dec. 31 2017 $26,610
Dec. 31 2017 Adj. $12,000 $38,610

b.
1
Halleran Company
Journal Entry
Date Account tittles Ref Debit Credit
Mar. 31 2018 Allowance for Doubtful Accounts $1,000
Account receivable $1,000

2
Halleran Company
Journal Entry
Date Account tittles Ref Debit Credit
May. 31 2018 Account receivable $1,000
 Allowance for Doubtful Accounts $1,000
Cash $1,000
Account receivable $1,000

Allowance for Doubtful Accounts

Date Explanation Ref Debit Credit Balance
Dec. 31 2019 Balance $12,000
Dec. 31 2017 Adj. $26,610 $38,610
Mar. 31 2018 $1,000 $37,610
May. 31 2018 $1,000 $38,610

c.
Halleran Company
Adjusting Entry
Date Account tittles Ref Debit Credit
Dec. 31 2018 BadDebts Expense ($31,600 + $800) $32,600
Allowance for Doubtful Accounts $32,600