The bank statement of Hibbert Supplies included a $300 NSF check that one of Hibberts customers had
Question:
The bank statement of Hibbert Supplies included a $300 NSF check that one of Hibbert€™s customers had written to pay for services that were provided by Hibbert.
Required
a. Show the effects of recognizing the NSF check on the financial statements by recording the appropriate amounts in a horizontal statements model like the following one:
b. Is the recognition of the NSF check on Hibbert€™s books an asset source, use, or exchange transaction?
c. Suppose the customer redeems the check by giving Hibbert $325 cash in e x change for the bad check. The additional $25 paid a service fee charged by Hibbert. Show the effects on the financial statements in the horizontal statements model in Requirement a.
d. Is the receipt of cash referred to in Requirement c an asset source, use, or exchange transaction?
e. Record in general journal form the adjusting entry for the NSF check and the subsequent entry for redemption of the check by the customer.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Step by Step Answer:
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds