### Bank Reconciliation and Financial Impact Analysis for Merrifield Lawn Care#### OverviewMerrifield Lawn Care’s bank statement at August 31 showed an ending balance of $23,737.09. The unadjusted cash account balance for Merrifield is $20,277.20. The following data were gathered by Merrifield’s accountant:- **Check number 2143** was correctly written for $302. It was recorded in the company's books as $320 for utilities.- **Outstanding checks** as of August 31: $7,148.93- **NSF check from a customer**: $74.04- **Debit memo related to the returned deposit**: $8.00- **Credit memo related to interest earned**: $10.00- **Deposits in transit**: $3,635.00#### Required Tasks**a.** Prepare a bank reconciliation for Merrifield Lawn Care at August 31.**b.** Indicate how each of the required adjusting entries impacts the financial statements.### Horizontal Statements ModelThis model helps in understanding how the adjustments affect the Balance Sheet, Income Statement, and Statement of Cash Flows. Below is a description of the components involved:- **Balance Sheet Components:** - **Assets**: Includes Cash and Accounts Receivables - **Liabilities and Stockholders’ Equity**- **Income Statement Components:** - **Revenue** - **Expenses** - **Net Income**- **Statement of Cash Flows**In the table, you would enter the effects of each item listed below. Note that any decrease in account balances and cash outflows should be marked with a minus sign.#### Adjusting Entries Description:- **Error in recording check 2143**- **Outstanding checks**- **NSF check from a customer**- **Debit memo related to the returned deposit**- **Credit memo related to interest earned**- **Deposits in transit**The changes should be noted under each category in the corresponding columns, ensuring that the necessary adjustments are clear and appropriately recorded. Round numbers to two decimal places where necessary.This tool provides a structured approach to aligning book balances with bank statements, ensuring that discrepancies are resolved and financial statements accurately reflect the company's financial position. **Educational Resource: Bank Reconciliation for Merrifield Lawn Care**Merrifield Lawn Care's bank statement as of August 31 showed an ending balance of $23,737.09. The unadjusted cash account balance for Merrifield is $20,277.20. The following data were gathered by Merrifield's accountant:- Check number 2143 was correctly written for $302. It was recorded in the company's books as $320 for utilities.- Outstanding checks as of August 31: $7,148.93- NSF check from customer: $74.04- Debit memo related to the returned deposit: $8.00- Credit memo related to interest earned: $10.00- Deposits in transit: $3,635.00**Required:**a. Prepare a bank reconciliation for Merrifield Lawn Care at August 31.b. Indicate how each of the required adjusting entries impacts the financial statements.---**Bank Reconciliation Layout:**1. **Prepare a bank reconciliation for Merrifield Lawn Care at August 31.** - Note: Amounts to be deducted should be indicated with a minus sign. Round your answers to 2 decimal places. - **Unadjusted Bank Balance:** *This is the balance as stated on the bank statement.* - **Adjustments to Bank Balance:** - **Outstanding Checks:** Subtract any checks that have not yet cleared. - **Deposits in Transit:** Add deposits made but not yet recorded by the bank. - **True Cash Balance:** *Calculate by adjusting the unadjusted bank balance based on the above factors.* - **Unadjusted Book Balance:** *This is the balance as per the company's records.* - **Adjustments to Book Balance:** - **NSF Checks, Debit/Credit Memos:** Adjust for bank fees, corrections, or interest not yet recorded in the books. - **Errors in Recording:** Correct errors found in the company’s books. - **True Cash Balance:** *Reconcile both balances to find the accurate cash balance.*This example highlights the importance of thorough financial reconciliation to ensure the accuracy of financial records. Understanding factors affecting cash flow and how they align with bank records is crucial for effective financial management.

Merrifield Lawn Care's bank statement at August 31 showed an ending balance of $23,737.09. The unadjusted cash account balance for Merrifield is $20,277.20. The following data were gathered by Merrifield's accountant: • Check number 2143 was correctly written for $302. It was recorded in the company's books as $320 for utilities. • Outstanding checks as of August 31: $7,148.93 • NSF check from customer: $74.04 Debit memo related to the returned deposit: $8.00 • Credit memo related to Interest earned: $10.00 • Deposits in transit: $3,635.00 Required: a. Prepare a bank reconciliation for Merrifield Lawn Care at August 31. b. Indicate how each of the required adjusting entries Impact the financial statements. Complete this question by entering your answers in the tabs below.

Merrifield Lawn Care's bank statement at August 31 showed an ending balance of $23,737.09. The unadjusted cash account balance for Merrifield is $20,277.20. The following data were gathered by Merrifield's accountant: • Check number 2143 was correctly written for $302. It was recorded in the company's books as $320 for utilities. • Outstanding checks as of August 31: $7,148.93 • NSF check from customer: $74.04 Debit memo related to the returned deposit: $8.00 • Credit memo related to Interest earned: $10.00 • Deposits in transit: $3,635.00 Required: a. Prepare a bank reconciliation for Merrifield Lawn Care at August 31. b. Indicate how each of the required adjusting entries Impact the financial statements. Complete this question by entering your answers in the tabs below.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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