
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Oscar's Red Carpet Store maintains a checking account with Academy Bank. Oscar's sells carpet each day but makes
bank deposits only once per week. The following provides information from the company's cash ledger for the month
ending February 28, 2021.
Date
Amount
No.
Date
Amount
$ 2,300 Checks:
1,900
2,800
3,700
1,200
$ 11,900
$ 4,300
600
321
322
323
324
Deposits:
2/4
2/11
2/18
2/25
2/26-2/28
2/2
2/8
2/12
2/19
2/27
2,100
1,800
400
Cash receipts:
325
326
2/28
900
1,500
$11,600
327
2/28
Balance on February 1
$ 6,400
Receipts
Disbursements
11,900
(11,600)
$ 6,700
Balance on February 28
Information from February's bank statement and company records reveals the following additional information:
a. The ending cash balance recorded in the bank statement is $10,390.
b. Cash receipts of $1,200 from 2/26-2/28 are outstanding.
c. Checks 325 and 327 are outstanding.
d. The deposit on 2/11 includes a customer's check for $400 that did not clear the bank (NSF check).
e. Check 323 was written for $2,800 for advertising in February. The bank properly recorded the check for this amount.
f. An automatic withdrawal for Oscar's February rent was made on February 4 for $1,300.
g. Oscar's checking account earns interest based on the average daily balance. The amount of interest earned for
February is $160.
h. In January, one of Oscar's suppliers, Titanic Fabrics, borrowed $5,200 from Oscar. On February 24, Titanic paid $5,350
($5,200 borrowed amount plus $150 interest) directly to Academy Bank in payment for January's borrowing.
i. Academy Bank charged service fees of $120 to Oscar's for the month.
2. Record the necessary cash adjustments. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the
first account field. Total entries to the same account together when enterina in the iournal entry worksheet).

Transcribed Image Text:Journal entry worksheet
1
2
Record the amounts that decrease cash.
Note: Enter debits before credits.
Transaction
General Journal
Debit
Credit
2
Accounts Receivable
400
Advertising Expense
Rent Expense
700
1,300
Expert Solution

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Step 1
Sometimes There may be a difference in cash & passbook Balances. Usually Cash & Bank Pass book show same balances, But when there is difference, The Banker Prepares a Statement called Bank reconciliation statement.
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