ACCT 2019

CHAPTER 1

Ex. 1–2

As in many ethics issues, there is no one right answer. A fired researcher at the company reported on this issue
in these terms: “The company covered up the first report, and the local newspaper uncovered the company’s
secret. The company was forced to not locate here (Collier County). It became patently clear that doing the least
that is legally allowed is not enough.”

Ex. 1–3

1. C
2. C
3. X
4. C
5. B
6. C
7. B
8. J
9. X
10. J

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Prob. 1–1A

1.
Stockholders’
Assets = Liabilities + Equity

Accts. Accts. Capital Fees Rent Sal. Supp. Auto Misc.

Cash + Rec. + Supplies = Payable + Stock – Dividends + Earned – Exp. – Exp. – Exp. – Exp. – Exp.
a. + 50,000 + 50,000
b. + 1,600 + 1,600
Bal. 50,000 1,600 1,600 50,000
c. – 500 – 500
Bal. 49,500 1,600 1,100 50,000
d. + 9,250 + 9,250
Bal. 58,750 1,600 1,100 50,000 9,250

e. – 2,500 – 2,500
Bal. 56,250 1,600 1,100 50,000 9,250 – 2,500

f. – 1,200 – 900
– 300
Bal. 55,050 1,600 1,100 50,000 9,250 – 2,500
– 900 – 300
g. – 1,900 – 1,900

Bal. 53,150 1,600 1,100 50,000 9,250 – 2,500 – 1,900

– 900– 300
h. – 1,050 – 1,050
Bal. 53,150 550 1,100 50,000 9,250 – 2,500 – 1,900 – 1,050
– 900 – 300
i. + 11,150 + 11,150

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Bal. 53,150 11,150 550 1,100 50,000 20,400 – 2,500 – 1,900 – 1,050
– 900 – 300
j. – 2,700 – 2,700
Bal. 50,450 11,150 550 1,100 50,000 – 2,700 20,400 – 2,500 – 1,900
– 1,050– 900 – 300

2. STOCKHOLDERS’ EQUITY IS THE RIGHT OF STOCKHOLDERS TO THE ASSETS OF THE

BUSINESS. THESE RIGHTS ARE INCREASED BY STOCKHOLDERS’ INVESTMENTS AND REVENUES
AND DECREASED BY DIVIDENDS AND EXPENSES. PROBLEMS

Prob. 1–1A [Alternative solution from another edition ]

1.
Stockholders’
Assets = Liabilities + Equity

Accts. Accts. Capital Fees Rent Sal. Supp. Auto Misc.

Cash + Rec. + Supplies = Payable + Stock – Dividends + Earned – Exp. – Exp. – Exp. – Exp. – Exp.
a. + 25,000 + 25,000
b. + 1,150 + 1,150
Bal. 25,000 1,150 1,150 25,000
c. – 600 – 600
Bal. 24,400 1,150 550 25,000
d. + 4,500 + 4,500
Bal. 28,900 1,150 550 25,000 4,500

e. – 1,500 – 1,500
Bal. 27,400 1,150 550 25,000 4,500 – 1,500

f. – 580 – 400 – 180

3|Page
Bal. 26,820 1,150 550 25,000 4,500 – 1,500
– 400 – 180
g. – 1,200 – 1,200

Bal. 25,620 1,150 550 25,000 4,500 – 1,500 – 1,200

– 400– 180
h. – 770 – 770
Bal. 25,620 380 550 25,000 4,500 – 1,500 – 1,200 – 770
– 400 – 180
i. + 2,250 + 2,250
Bal. 25,620 2,250 380 550 25,000 6,750 – 1,500 – 1,200 – 770
– 400 – 180
j. – 1,000 – 1,000
Bal. 24,620 2,250 380 550 25,000 – 1,000 6,750 – 1,500 – 1,200
– 770– 400 – 180

2. Stockholders’ equity is the right of stockholders to the assets of the business. These rights are increased by
stockholders’ investments and revenues and decreased by dividends and expenses.

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5|Page
CHAPTER 2

Ex. 2–13

2009
Mar. 1 Rent Expense......................................................... 3,000
Cash.................................................................. 3,000
2 Advertising Expense............................................... 1,800
Cash.................................................................. 1,800
5 Supplies.................................................................. 900
Cash.................................................................. 900
6 Office Equipment.................................................... 12,300
Accounts Payable............................................. 12,300
10 Cash....................................................................... 4,100
Accounts Receivable......................................... 4,100
15 Accounts Payable................................................... 1,200
Cash.................................................................. 1,200
27 Miscellaneous Expense.......................................... 500
Cash.................................................................. 500
30 Utilities Expense..................................................... 180
Cash.................................................................. 180
31 Accounts Receivable.............................................. 26,800
Fees Earned...................................................... 26,800
31 Utilities Expense..................................................... 315
Cash.................................................................. 315
31 Dividends................................................................ 2,000
Cash………………………………………. 2,000

6
 PROBLEMS

Prob. 2–1A 1. and 2.

Cash Accounts Payable

(a) 30,000 (b) 4,500 (h) 1,750 (e) 6,000
(g) 7,500 (c) 3,000 (j) 1,000
(d) 1,450 Bal. 5,250
(f) 2,000
(h) 1,750 Capital Stock
(i) 500 (a) 30,000
(l) 1,600
(m) 325 Professional Fees
(n) 250 (g) 7,500
(o) 400 (k) 5,200
Bal. 21,725 Bal. 12,700

Accounts Receivable Rent Expense

(k) 5,200 (c) 3,000

Supplies Salary Expense

(d) 1,450 (l) 1,600

Prepaid Insurance Blueprint Expense

(f) 2,000 (j) 1,000

Automobiles Automobile Expense

(b) 19,500 (o) 400

Equipment Miscellaneous Expense

(e) 6,000 (i) 500
(m) 325

Bal. 825

Notes Payable
(n) 250 (b) 15,000
Bal. 14,750

7
Prob. 2–1A Concluded

3.
TRAVIS FORTNEY, ARCHITECT, P.C.
Unadjusted Trial Balance
April 30, 2010
Debit Credit
Balances Balances
Cash...................................................................................... 21,725
Accounts Receivable.......................................................... 5,200
Supplies................................................................................ 1,450
Prepaid Insurance............................................................... 2,000
Automobiles......................................................................... 19,500
Equipment............................................................................ 6,000
Notes Payable...................................................................... 14,750
Accounts Payable................................................................ 5,250
Capital Stock........................................................................ 30,000
Professional Fees................................................................ 12,700
Rent Expense....................................................................... 3,000
Salary Expense.................................................................... 1,600
Blueprint Expense............................................................... 1,000
Automobile Expense........................................................... 400
Miscellaneous Expense...................................................... 825
62,700 62,700

8
Prob. 2–3A

1.
JOURNAL Pages 1 and 2
Post.
Date Description Ref. Debit Credit

2010
July 1 Cash.......................................................... 11 18,000
Capital Stock....................................... 31 18,000
4 Rent Expense........................................... 53 1,750
Cash..................................................... 11 1,750
10 Truck......................................................... 18 15,000
Cash..................................................... 11 1,000
Notes Payable..................................... 21 14,000
13 Equipment................................................ 16 7,000
Accounts Payable............................... 22 7,000
14 Supplies................................................... 13 1,200
Cash..................................................... 11 1,200
15 Prepaid Insurance................................... 14 2,700
Cash..................................................... 11 2,700
15 Cash.......................................................... 11 7,500
Fees Earned......................................... 41 7,500
21 Accounts Payable................................... 22 2,500
Cash..................................................... 11 2,500
24 Accounts Receivable.............................. 12 8,600
Fees Earned......................................... 41 8,600
26 Truck Expense......................................... 55 800
Accounts Payable............................... 22 800
27 Utilities Expense..................................... 54 900
Cash..................................................... 11 900
27 Miscellaneous Expense.......................... 59 315
Cash..................................................... 11 315

9
Prob. 2–3A Continued

JOURNAL Pages 1 and 2

Post.
Date Description Ref. Debit Credit

2010
July 29 Cash.......................................................... 11 3,600
Accounts Receivable.......................... 12 3,600
30 Wages Expense....................................... 51 2,400
Cash..................................................... 11 2,400
31 Dividends................................................. 33 2,000
Cash..................................................... 11 2,000

2.
Cash 11
Post. Balance
Date Item Ref. Dr. Cr. Dr. Cr.

2010
July 1 ................................................ 1 18,000 ............ 18,000 ............
4 ................................................ 1 ............ 1,750 16,250 ............
10 ................................................ 1 ............ 1,000 15,250 ............
14 ................................................ 1 ............ 1,200 14,050 ............
15 ................................................ 1 ............ 2,700 11,350 ............
15 ................................................ 1 7,500 ............ 18,850 ............
21 ................................................ 2 ............ 2,500 16,350 ............
27 ................................................ 2 ............ 900 15,450 ............
27 ................................................ 2 ............ 315 15,135 ............
29 ................................................ 2 3,600 ............ 18,735 ............
30 ................................................ 2 ............ 2,400 16,335 ............
31 ................................................ 2 ............ 2,000 14,335 ............

Accounts Receivable 12
2010
July 24 ................................................ 2 8,600 ............ 8,600 ............
29 ................................................ 2 ............ 3,600 5,000 ............

10
Prob. 2–3A Continued

Supplies 13
Post. Balance
Date Item Ref. Dr. Cr. Dr. Cr.

2010
July 14 ................................................ 1 1,200 ............ 1,200 ............

Prepaid Insurance 14
2010
July 15 ................................................ 1 2,700 ............ 2,700 ............

Equipment 16
2010
July 13 ................................................ 1 7,000 ............ 7,000 ............

Truck 18
2010
July 10 ................................................ 1 15,000 ............ 15,000 ............

Notes Payable 21
2010
July 10 ................................................ 1 ............ 14,000 ............ 14,000

Accounts Payable 22
2010
July 13 ................................................ 1 ............ 7,000 ............ 7,000
21 ................................................ 2 2,500 ............ ............ 4,500
26 ................................................ 2 ............ 800 ............ 5,300

Capital Stock 31
2010
July 1 ................................................ 1 ............ 18,000 ............ 18,000

Dividends 33
2010
July 31 ................................................ 2 2,000 ............ 2,000 ............

11
Prob. 2–3A Continued

Fees Earned 41
Post. Balance
Date Item Ref. Dr. Cr. Dr. Cr.

2010
July 15 ................................................ 1 ............ 7,500 ............ 7,500
24 ................................................ 2 ............ 8,600 ............ 16,100

Wages Expense 51
2010
July 30 ................................................ 2 2,400 ............ 2,400 ............

Rent Expense 53
2010
July 4 ................................................ 1 1,750 ............ 1,750 ............

Utilities Expense 54
2010
July 27 ................................................ 2 900 ............ 900 ............

Truck Expense 55
2010
July 26 ................................................ 2 800 ............ 800 ............

Miscellaneous Expense 59
2010
July 27 ................................................ 2 315 ............ 315 ............

12
Prob. 2–3A Concluded

3.
PHOTOGENIC DESIGNS
Unadjusted Trial Balance
July 31, 2010
Debit Credit
Balances Balances
Cash...................................................................................... 14,335
Accounts Receivable.......................................................... 5,000
Supplies................................................................................ 1,200
Prepaid Insurance............................................................... 2,700
Equipment............................................................................ 7,000
Truck..................................................................................... 15,000
Notes Payable...................................................................... 14,000
Accounts Payable................................................................ 5,300
Capital Stock........................................................................ 18,000
Dividends.............................................................................. 2,000
Fees Earned......................................................................... 16,100
Wages Expense................................................................... 2,400
Rent Expense....................................................................... 1,750
Utilities Expense.................................................................. 900
Truck Expense..................................................................... 800
Miscellaneous Expense...................................................... 315
53,400 53,400

Ex. 3–1

1. Prepaid expense

2. Accrued revenue
3. Unearned revenue
4. Accrued expense
5. Unearned revenue
6. Prepaid expense
7. Accrued expense
8. Accrued expense

13
Prob. 3–1A

1. a. Accounts Receivable.................................................. 9,560

Fees Earned............................................................ 9,560
Accrued fees earned.

b. Supplies Expense........................................................ 2,250

Supplies.................................................................. 2,250
Supplies used ($3,150 – $900).

c. Wages Expense........................................................... 1,200

Wages Payable....................................................... 1,200
Accrued wages.

d. Unearned Rent............................................................. 3,125

Rent Revenue......................................................... 3,125
Rent earned ($9,375/3).

e. Depreciation Expense................................................. 1,600

Accumulated Depreciation—Equipment............. 1,600
Depreciation expense.

2. Adjusting entries are a planned part of the accounting process to update the
accounts. Correcting entries are not planned but arise only when necessary
to correct errors.

14
Prob. 3–2A

a. Supplies Expense................................................. 1,350

Supplies........................................................... 1,350
......................Supplies used ($1,950 – $600).

b. Depreciation Expense.......................................... 1,000

Accumulated Depreciation............................. 1,000
.....................................Depreciation for year.

c. Rent Expense........................................................ 6,000

Prepaid Rent.................................................... 6,000
...................................................Rent expired.

d. Wages Expense.................................................... 1,900

Wages Payable................................................ 1,900
...............................................Accrued wages.

e. Unearned Fees...................................................... 5,250

Fees Earned..................................................... 5,250
.......................Fees earned ($9,000 – $3,750).

f. Accounts Receivable........................................... 4,500

Fees Earned..................................................... 4,500
...................................................Accrued fees.

15
CHAPTER 4 P 4-1A
PRISON WATCH COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED JUNE 30, 2010
SERVICE REVENUE
Fees $290,700
Less Expenses:
Salaries & Wages $147,000
Advertising 94,800
Utilities 27,000
Travel 18,750
Miscellaneous 5,875
Insurance 1,450
Supplies 1,525
Depreciation: Building 2,000
Equipment 5,200 303,600
(12,900)
Other expenses or income
Rent revenue 2,000
Net Loss ($10,900)

PRISON WATCH COMPANY

RETAINED EARNINGS STATEMENT
FOR THE YEAR ENDED JUNE 30, 2010
Beginning Retained Earnings $238,800
ADD: Net Loss 10,900
227,900
Less: Dividends 15,000
Ending Retained Earnings 212,900

16
 PRISON WATCH COMPANY
STATEMENT OF FINANCIAL POSITION
JUNE 30, 2010
ASSETS
PROPERTY, PLANT, EQUIPMENT
Land $75,000
Building 205,000
Less: Accumulated Depreciation 78,000 127,000
Euipment 139,000
Less: Accumulated Depreciation 59,650 79,350
Total fixed assets 281,350
CURRENT ASSETS
Supplies 500
Accounts receivable 19,950
Prepaid insurance 1,250
Cash 4,800
Total current assets 26,500
Total assets 307,850

EQUITY AND LIABILITIES

EQUITY
Capital stock 80,000
Retained Earnings 212,900 292,900
LIABILITIES
Current liabilities
Accounts payable 9,750
Unearned rent 2,500
Salaries & wages payable 2,700 14,950
Total equity and liabilities 307,850

17
CLOSING ENTRIES
ACCOUNT DR CR
Income summary $ 303,600
Salaries & Wages $147,000
Advertising 94,800
Utilities 27,000
Travel 18,750
Miscellaneous 5,875
Insurance 1,450
Supplies 1,525
Depreciation: Building 2,000
Equipment 5,200
290,700
Fees Revenue 2,000
Rent Revenue
Income Summary 290,900

15,000
Retained Earnings
Dividends 15,000
10,900
Retained Earnings
Income Summary 10,900

18
(e) PRISON WATCH COMPANY

Post-Closing Trial Balance

June 30, 2010

   Debit       Credit   

Cash..........................................................................................
$ 4,800

Accounts Receivable.................................................................
19,950

Prepaid Insurance......................................................................1,250

Supplies 500

Land…………………..................................................................
75,000

Building……………………………………………….. 205,000

Accumulated Depreciation—building $ 78,000

Equipment..................................................................................
139,000

19
 Accumulated Depreciation—Equipment.................................... 59,650

Unearned rent............................................................................2,700 2,500

Salaries & wages payable…………………………..

Accounts Payable...................................................................... 9,750

Share Capital—Ordinary............................................................ 80,000

Retained Earnings.....................................................................
                212,900

$445,500 $445,500

CHAPTER 5

Prob. 5–3A

Aug. 1 Accounts Receivable—Tomahawk Co. ........................ 12,500

Sales.......................................................................... 12,500
1 Cost of Merchandise Sold.............................................. 7,500
Merchandise Inventory............................................. 7,500
2 Cash................................................................................ 21,400
Sales.......................................................................... 20,000
Sales Tax Payable..................................................... 1,400
2 Cost of Merchandise Sold.............................................. 13,100
Merchandise Inventory............................................. 13,100
5 Accounts Receivable—Epworth Company.................... 30,000
Sales.......................................................................... 30,000
5 Cost of Merchandise Sold.............................................. 19,500
Merchandise Inventory............................................. 19,500
8 Cash................................................................................ 12,305
Sales.......................................................................... 11,500
Sales Tax Payable..................................................... 805
8 Cost of Merchandise Sold.............................................. 7,000
Merchandise Inventory............................................. 7,000

20
13 Cash................................................................................ 8,000
Sales.......................................................................... 8,000
13 Cost of Merchandise Sold.............................................. 5,000
Merchandise Inventory............................................. 5,000
14 Accounts Receivable—Osgood Co. .............................. 11,800
Sales.......................................................................... 11,800
14 Cost of Merchandise Sold.............................................. 7,000
Merchandise Inventory............................................. 7,000
15 Cash................................................................................ 29,700
Sales Discounts............................................................... 300
Accounts Receivable—Epworth Company 30,000

21
Prob. 5–3A Concluded

Aug.16 Sales Returns and Allowances....................................... 1,800

Accounts Receivable—Osgood Co. ........................ 1,800
16 Merchandise Inventory................................................... 1,000
Cost of Merchandise Sold........................................ 1,000
18 Accounts Receivable—Horton Company...................... 6,850
Sales.......................................................................... 6,850
18 Accounts Receivable—Horton Company...................... 210
Cash.......................................................................... 210
18 Cost of Merchandise Sold.............................................. 4,100
Merchandise Inventory............................................. 4,100
24 Cash................................................................................ 9,900
Sales Discounts............................................................... 100
Accounts Receivable—Osgood Co. ........................ 10,000
28 Cash................................................................................ 6,923
Sales Discounts............................................................... 137
Accounts Receivable—Horton Company................ 7,060
31 Delivery Expense........................................................... 2,100
Cash.......................................................................... 2,100
31 Cash................................................................................ 12,500
Accounts Receivable—Tomahawk Co. .................. 12,500
Sept. 3 Credit Card Expense....................................................... 980
Cash.......................................................................... 980
10 Sales Tax Payable........................................................... 1,750
Cash 1,750
Prob. 5–5A

Dec. 3 Merchandise Inventory................................................... 29,400

Accounts Payable—Hillsboro Co. .......................... 29,400
[$38,000 – ($38,000 × 25%)] = $28,500;
$28,500 + $900 = $29,400.
5 Merchandise Inventory................................................... 18,750
Accounts Payable—Deepwater Co. ........................ 18,750
6 Accounts Receivable—Zion Co. ................................... 17,550
Sales.......................................................................... 17,550
[$27,000 – ($27,000 × 35%)] = $17,550.
6 Cost of Merchandise Sold.............................................. 14,000
Merchandise Inventory............................................. 14,000

22
Prob. 5–5A Continued
7 Accounts Payable—Deepwater Co. .............................. 3,000
Merchandise Inventory............................................. 3,000
13 Accounts Payable—Hillsboro Co. ................................ 29,400
Cash.......................................................................... 28,830
Merchandise Inventory............................................. 570
15 Accounts Payable—Deepwater Co. .............................. 15,750
Cash.......................................................................... 15,435
Merchandise Inventory............................................. 315
16 Cash................................................................................ 17,199
Sales Discounts............................................................... 351
Accounts Receivable—Zion Co. ............................. 17,550
19 Cash................................................................................ 58,000
Sales.......................................................................... 58,000
19 Cost of Merchandise Sold.............................................. 34,800
Merchandise Inventory............................................. 34,800
22 Accounts Receivable—Smith River Co. ....................... 15,400
Sales.......................................................................... 15,400
22 Cost of Merchandise Sold.............................................. 9,000
Merchandise Inventory............................................. 9,000
23 Cash................................................................................ 33,600
Sales.......................................................................... 33,600

Dec. 23 Cost of Merchandise Sold.............................................. 20,000

Merchandise Inventory............................................. 20,000
28 Sales Returns and Allowances....................................... 2,400
Accounts Receivable—Smith River Co................... 2,400
28 Merchandise Inventory................................................... 1,400
Cost of Merchandise Sold........................................ 1,400
31 Credit Card Expense....................................................... 1,750
Cash.......................................................................... 1,750

23
CHAPTER 7

Ex. 7–3

a. The sales clerks could steal money by writing phony refunds and pocketing the cash
supposedly refunded to these fictitious customers.

b. Anasazi Earth Clothing suffers from inadequate separation of responsibilities for related
operations since the clerks issue refunds and restock all merchandise. In addition, there is a
lack of proofs and security measures since the supervisors authorize returns two hours after
they are issued.

c. A store credit for any merchandise returned without a receipt would reduce the possibility of
theft of cash. In this case, a clerk could only issue a phony store credit rather than taking
money from the cash register. A store credit is not as tempting as cash. In addition, sales
clerks could only use a few store credits to purchase merchandise for themselves without
management getting suspicious.
An advantage of issuing a store credit for returns without a receipt is that the possibility of
stealing cash is reduced. The store will also lose less revenue if customers must choose other
store merchandise instead of getting a cash refund. The overall level of returns/exchanges
may be reduced, since customers will not return an acceptable gift simply because they need
cash more than the gift. The policy will also reduce the “cash drain” during the weeks
immediately following the holidays, allowing Anasazi Earth Clothing to keep more of its
money earning interest or use that cash to purchase spring merchandise or pay creditors.

A disadvantage of issuing a store credit for returns without a receipt is that preholiday sales
might drop as gift-givers realize that the return policy has tightened. After the holidays,
customers wishing to return items for cash refunds may be frustrated when they learn the
store policy has changed. The ill will may reduce future sales. It may take longer to explain
the new policy and fill out the paperwork for a store credit, lengthening lines at the return
counter after the holidays. Sales clerks will need to be trained to apply the new policy and
write up a store credit. Sales clerks also will need to be trained to handle the redemption of
the store credit on future merchandise purchases.

d. The potential for abuse in the cash refund system could be eliminated if clerks were required
to get a supervisor’s authorization for a refund before giving the customer the cash. The
supervisor should only authorize the refund after seeing both the customer and the
merchandise that is being returned.
An alternative would be to use security measures that would detect a sales clerk attempting
to ring up a refund and remove cash when a customer is not present at the sales desk. These
security measures could include cameras or additional security personnel discreetly
monitoring the sales desk.
Finally, an employee on the following work shift could be assigned the responsibility to restock returned
merchandise and reconcile the returns to a refund list for the department.

24
 Ex. 7–15

To prevent the fraud scheme described, Digital Com must separate responsibilities for related
operations. As in the past, all service requisitions should be submitted to the Purchasing
Department. After receiving the service request, Purchasing should complete a Service
Verification form, stating what service has been ordered and the name of the company that will
provide the service.

This form should be delivered via intercompany mail to the person responsible for verifying that
the service was performed. This person should be someone who has first-hand knowledge of
whether the service has been performed. This person, who must be someone other than the
manager requesting the service, should fill in the date and time the service was received and sign
the form. In addition, the vendor providing the service should sign the form before leaving the
premises. When completed, the Service Verification form should be forwarded to the Accounting
Department. Accounting will authorize payment of the vendor’s invoice after the Service
Verification form has been compared with the invoice.

Prob. 7–3A

1. INTERACTIVE SYSTEMS
Bank Reconciliation
February 28, 2010
Cash balance according to bank statement.................................. $ 13,333
Add deposit of February 28, not recorded by bank..................... 4,500
$ 17,833
Deduct: Outstanding checks.................................................... $4,118
Bank error in charging check as $145
instead of $415..................................................... 270 4,388
Adjusted balance.......................................................................... $ 13,445

Cash balance according to company’s records............................ $ 7,635

Add: Proceeds of note collected by bank, including
$200 interest............................................................... $5,200
Error in recording check.................................................. 630 5,830
$ 13,465
Deduct bank service charges........................................................ 20
Adjusted balance.......................................................................... $ 13,445

25
2. Cash............................................................................................ 5,830
Notes Receivable.................................................................. 5,000
Interest Revenue................................................................... 200
Accounts Payable—Busser Co. ........................................... 630
Miscellaneous Administrative Expense..................................... 20
Cash...................................................................................... 20

Prob. 7–4A

1. FRED’S SPORTS CO.

Bank Reconciliation
June 30, 2010
Balance per bank statement...................................................... $18,175
Add deposit of June 30, not recorded by bank 4,275
$22,450
Deduct: Outstanding checks................................................. $ 6,840
Bank error in charging check as $460
instead of $640.................................................. 180 7,020
Adjusted balance....................................................................... $15,430

Balance per company’s records................................................ $13,065*

Add: Proceeds of note collected by bank,
including $240 interest............................................ $ 3,240
Error in recording check............................................... 720 3,960
$17,025
Deduct: Check returned because of insufficient
funds.................................................................. $ 1,560
Bank service charges............................................... 35 1,595
Adjusted balance....................................................................... $15,430
*Cash balance, June 1.......................................................... $ 16,515
Plus cash deposited in June................................................. 40,150
Less checks written in June................................................. (43,600)
Balance per company’s records, June 30............................ $ 13,065

2. Cash............................................................................................ 3,960
Notes Receivable.................................................................. 3,000
Interest Revenue................................................................... 240
Accounts Payable—Miliski Co............................................ 720
Accounts Receivable—Chim Tech............................................ 1,560
Miscellaneous Administrative Expense..................................... 35
Cash 1,595

26