Question

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.
Required:
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?


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  • CreatedNovember 02, 2015
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