Nicole’s Getaway Spa (NGS) continues to grow and develop. Nicole is now evaluating a computerized accounting system and needs your help in understanding how source documents inform accounting processes. She also needs some help reconciling NGS’s bank account.
1. For each source document shown below, prepare the appropriate journal entry or indicate that no journal entry is required.
a. Purchase order dated October 13 for massage chairs costing $ 765 and oil supplies costing $ 240.
b. Remittance advice from customer for $ 93, received October 17.
c. Receiving report indicating October 22 receipt of October 13 order. Also received supplier invoice totaling $ 1,005.
d. NGS check for payment in full of October 13 order.
2. Nicole has asked you to prepare a bank reconciliation for NGS. According to her records, NGS’s cash balance is $ 6,000 at December 31, but the bank reports a balance of $ 5,500.
a. The bank deducted $ 250 for an NSF check from a customer deposited on December 22.
b. NGS has written checks totaling $ 3,500 that have not yet cleared the bank.
c. The bank added $ 10 cash to the account for interest earned in December.
d. NGS made a $ 3,480 deposit on December 31, which will be recorded by the bank in January.
e. The bank deducted $ 10 for service charges.
f. NGS wrote a check to a supplier on account for $ 300 but mistakenly recorded it as $ 30.
3. Prepare journal entries for items (a)–(f) from the bank reconciliation, if applicable. If a journal entry is not Required. for one or more of the reconciling items, indicate “no journal entry required.
4. If NGS also has $ 120 of petty cash and $ 1,000 invested in government Treasury bills purchased in August, what is the amount of Cash and Cash Equivalents on NGS’s December 31 balance sheet?

  • CreatedNovember 02, 2015
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