Part I At 31 December 2021, the balance of the Cash account according to the records of Bowen Company ("BC") was $39,744. The bank statement showed a balance of $36,920 as at 31 December 2021. Prepare the bank reconciliation of BC at 31 December 2021, using the following information: There were no outstanding checks and deposit in transit at the end of 30 November 2021. (1) The deposit shown in the bank statement was $28,000 while the accounting records of BC showed the total deposit made in December was $35,900. (2) The following checks issued by BC were still outstanding: Check no. 601, $2003; no. 602, S1,000; no. 605, $641. (3) A note receivable for $4,550 (included an interest of $450) was directly credited to BC's account by the bank. (4) A bank service charge shown in the bank statement was $100. (5) A check for $650 drawn by a customer, Alex Chow, was deducted from BC's account by the bank and returned with the notation "NSF". (6) BC's check no. 599 issued in payment of $7,565 to purchase supplies but erroneously recorded in BC's accounting records as $7,000.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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