The December cash records of Duffy Insurance follow

19 May No Comments

The December cash records of Duffy Insurance follow:

Duffy’s Cash account shows a balance of $17,050 at December 31. On December 31, Duffy Insurance received the following bank statement:

Additional data for the bank reconciliation follow:

a. The EFT credit was a receipt of rent. The EFT debit was an insurance payment.

b. The NSF check was received from a customer.

c. The $1,600 bank collection was for a note receivable.

d. The correct amount of check 1419, for rent expense, is $1,910. Duffys controller mistakenly recorded the check for $1,190.

Requirements

1. Prepare the bank reconciliation of Duffy Insurance at December 31, 2016.

2. Journalize any required entries from the bank reconciliation.

SOLUTION

Requirement 1

BANK     BOOK    
Balance, December 31, 2016   $ 18,480 Balance, December 31, 2016   $ 17,050
ADD:     ADD:    
Deposit in transit   1,830 EFT collection of rent $ 400  
    20,310 Bank collection of note 1,600 2,000
          19,050
LESS:     LESS:    
Outstanding checks     Correction of book error 720  
No. 1420 $ 1,470   NSF check 600  
No. 1421 1,200   EFT – insurance payment 700  
No. 1422 630 3,300 Service charge 20 2,040
Adjusted bank balance, December 31, 2016   $ 17,010 Adjusted book balance, December 31, 2016   $ 17,010
           

Requirement 2

Date Accounts and Explanation Debit Credit
Dec. 31 Cash 400  
  Rent Revenue   400
  To record EFT rent collection.    
       
31 Cash 1,600  
  Notes Receivable   1,600
  To record bank collection of notes receivable.    
       
31 Rent Expense 720  
  Cash   720
  To record error on check 1419.    
       
31 Accounts Receivable 600  
  Cash   600
  To record NSF check.    
       
31 Insurance Expense 700  
  Cash   700
  To record EFT insurance payment.    
       
31 Bank Expense 20  
  Cash   20
  To record bank service charges incurred.    



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ACCOUNTING 416 The December cash records of Duffy Insurance follow.docx

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