he March bank reconciliation statement for Cab World, Incorporated, showed an NSF check of $870 from J. Brown as well as a bank service charge of $12 for monthly service fees. Which of the following is the correct journal entry required to record these items.
Question
he March bank reconciliation statement for Cab World, Incorporated, showed an NSF check of 12 for monthly service fees. Which of the following is the correct journal entry required to record these items.
Solution
The correct journal entry to record these items would be:
-
Debit (increase) Accounts Receivable for $870. This is because the NSF (Non-Sufficient Funds) check from J. Brown means that the payment they made to Cab World, Incorporated, has bounced due to insufficient funds in their account. Therefore, Cab World, Incorporated, still has a receivable from J. Brown.
-
Debit (increase) Bank Service Charges Expense for $12. This is because the bank has charged Cab World, Incorporated, a fee for their services.
-
Credit (decrease) Bank for the total amount of 870 + $12). This is because both the NSF check and the bank service charge reduce the company's bank balance.
So, the journal entry would look like this:
Accounts Receivable (J. Brown) Debit 12 Bank Credit $882
Similar Questions
The following data was taken from a firm’s bank reconciliation statement: book balance, $7,910; deposit in transit, $150; NSF check from a customer, $200; outstanding checks, $5,000; bank service charge, $10. Its adjusted book balance is
A company has a $10,000 cash balance per its books. The bank statement has a balance of $9,580. The bank reconciliation included $800 of deposits-in transits, $500 of checks outstanding, a $100 NSF check from a customer, and a $20 bank service charge. Given the above reconciling items, the up-to-date cash balance equals .
Your customer's NSF check found on the bank statement is a reconciling item on a bank reconciliation and will need to be ______.Multiple choice question.added to the Cash balance in your accounting recordsdeducted from the Cash balance in your accounting recordsadded back to the bank balancededucted from the bank balance twice since it was added in error originally
Neumann, Inc.'s books show an ending cash balance of $20,000 before preparing the bank reconciliation. Given that the bank reconciliation shows outstanding checks of $2,000; deposits outstanding of $3,000; NSF check of $200; and interest earned on the bank account of $30, the company's up-to-date ending cash balance equals:Multiple choice question.$21,000$18,000$20,200$19,830
The accountant for the Muntinlupa Company assembled the following data: June 30July 31Cash account balanceP 15,822P 39,745Bank statement balance 107,082 137,817Deposits in transit 8,201 12,880Outstanding checks 27,718 30,112Bank service charge 72 60Customer's check deposited July 10, returned by bank on July 16 marked NSF, and redeposited immediately; no entry made on books for return or redeposit 8,250Collection by bank of company's notes receivable 71,815 80,900 The bank statements and the company's cash records show these totals: Disbursements in July per bank statementP218,373Cash receipts in July per Muntinlupa's books236,452 Based on the application of the necessary audit procedures and appreciation of the above data, how much is the cash shortage as of July 31?Select one:a.P8,250b.P196,144c.P0d.P71,815
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.