ACC 205 Homework: Week Four Exercises Assignment 1.Question # 1
S8-8
For each timing difference listed, identify whether the difference would be report
... [Show More] ed on the book side of
the reconciliation or the bank side of the reconciliation. In addition, identify whether the difference
would be an addition or subtraction.
Timing difference Is book or bank affected?
Is it an addition or
subtraction?
a. Deposit in transit Bank Addition
b. Bank collection Book Addition
c. Debit memorandum from bank Book Subtraction
d. EFT cash receipt Book Addition
e. Outstanding checks Bank Subtraction
f. $1,000 deposit erroneously recorded by the
bank as $100 Bank Addition
g. Service charges Book Subtraction
h. Interest revenue Book Addition
i. $2,500 cash payment for rent expense
erroneously recorded by the business as $250 Book Subtraction
j. Credit memorandum from bank Book Addition
Question # 2
S8-9
The Cash account of First on Alert Security Systems reported a balance of $ 2,380 at December 31, 2018.
There were outstanding checks totaling $ 700 and a December 31 deposit in transit of $ 100. The bank
statement, which came from Tri Cities Bank, listed the December 31 balance of $ 3,510. Included in the
bank balance was a collection of $ 540 on account from Cathy Karr, a First on Alert customer who pays
the bank directly. The bank statement also shows a $ 30 service charge and $ 20 of interest revenue that
First on Alert earned on its bank balance. Prepare First on Alert's bank reconciliation at December 31.
First on Alert Security Systems
Bank Reconciliation
December 31, 2018
Bank:
Balance, December 31, 2018 $3,510
ADD: Deposit in transit 100
3,610
LESS: Outstanding checks $700 700
Adjusted bank balance, December 31, 2018 $2,910
Book:
Balance, December 31, 2018 $2,380
ADD: Bank collection $540
Interest revenue 20 560
2,940
LESS: Service charge $30 30
Adjusted book balance, December 31, 2018 $2,910
Quesiton # 3
S8-10
Safety Security Systems' bank reconciliation follows.
Safety Security Systems
Bank Reconciliation
December 31, 2018
Bank:
Balance, December 31, 2018 $4,740
ADD: Deposit in transit 300
5,040
LESS: Outstanding checks $2,000 2,000
Adjusted bank balance, December 31, 2018 $3,040
Book:
Balance, December 31, 2018 $2,380
ADD: Bank collection $670
Interest revenue 10 680
3,060
LESS: Service charge $20 20
Adjusted book balance, December 31, 2018 $3,040
Included in the bank balance is a collection of $670 on account from Wayne Brown, a Safety customer
who pays the bank directly. Journalize the company's transactions that arise from the bank reconciliation.
Include an explanation with each entry.
Journalize the transactions in the order presented in the bank reconciliation. (Record debits first, then
credits. Select the explanation on the last line of the journal entry table.)
Date Accounts and Explanation Debit Credit
Dec. 31 Cash 670
Accounts Receivable 670
Collection on account
Date Accounts and Explanation Debit Credit
Dec. 31 Cash 10
Interest Revenue 10
Interest earned on bank balance
Date Accounts and Explanation Debit Credit
Dec. 31 Bank Expense 20
Cash 20
Bank service charge
Question # 4
S8-11
Super Banners reported the following figures in its financial statements:
Cash $30,500
Cash Equivalents 14,450
Total Current Liabilities 29,000
Compute the cash ratio for Super Banners. Determine the formula, then calculate the cash ratio. (Enter
the cash ratio to two decimal places, X.XX. [Show Less]