Part Four Instructions In this part of the practice set, the student will prepare a Bank...

      

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Part Four Instructions In this part of the practice set, the student will prepare a Bank Reconciliation for the month of January. Prepare it in Word or Excel and use the ending balance in your cash account for the cash for your books. Be prepared to turn in the Bank Reconciliation after answering the questions in Blackboard. Requirements 1. Make sure you have corrected any errors on your journal and adjusting journal entries and have the correct balance for the cash account before starting the Bank Reconciliation. 2. Bank Reconciliation: Using the cash balance per books and the bank statement, prepare a bank reconciliation. A template you can use to create a Bank reconciliation is located at the back of this practice set. 3. Record Bank Reconciliation Adjustments: After you have prepared the bank reconciliation you must make any adjusting journal entries to your cash account by entering them in the general journal of the practice set so that the general ledger cash account agrees with the bank reconciliation. Bank Statement Part 4: Prepare a Bank Reconciliation using the Bank Statement and the template below. Wells Fargo Bank Balance Ending Cash Balance Deposits in Transit Outstanding Checks Adjustments or Errors +/- Reconciled Balance Template for Bank Reconciliation "Maverick's Boards" Ending Cash Balance Adjustments or Errors +/- Reconciled Balance Transactions 2. 3. 4. 5. 6. 7. 8. 9. Date 1/02/2020 Deposit No. /Check No. 1/02/2020 Deposit #1 1/03/2020 Ck #1001 1/03/2020 Ck #1002 1/03/2020 1/05/2020 Deposit #2 1/05/2020 Ck #1003 1/06/2020 Ck #1004 1/06/2020 Ck #1005 Description Blaise met with his lawyer and CPA for advice on starting the business. The lawyer told Mr. Maverick to register the company name Maverick's Boards with the County of El Paso. In addition, Mr. Maverick will get an employer identification number (EIN) from the Internal Revenue Service and get a sales tax permit from the state of Texas. Mr. Maverick opened a business checking account at Wells Fargo Bank by depositing $70,000. The corporation issued him a stock certificate for 7,000 shares of common stock with no par value. Mr. Maverick signed a one-year rental. He was required to pay $9,000 for rent for the months of January 1, 2020- June 30, 2020. Arranged for a general business liability insurance policy and paid $4,000 to State Penn Insurance. This premium is for twelve months coverage. Purchased a new computer system that cost $5,200 from Computer Inc. for use in the business. Mr. Maverick signed a 6 month, 10% note payable for the cost of the system. The computer system has an estimated useful life of five years the residual (salvage) value is $400. This will be recorded as Computer Equipment. Depreciation will be an adjusting entry using straight- line depreciation. Signed a note payable to borrow $10,000 from Wells Fargo bank. Interest is 12% annually and the note is to be repaid with interest in twelve months. Interest will be an adjusting entry. Paid $1,100 for shipping supplies. Paid $14,600 for furniture and fixtures. The estimated service life of these assets is 8 years. The residual (salvage) value is $200. These items will be recorded as Furniture and Fixtures and depreciated accordingly. Depreciation will be done in the adjusting journal entries using straight-line depreciation. Arranged for Sun City Movers to make the delivery of the computer system and paid the delivery charge of $750. This charge should be added to the cost of the computer equipment purchased and depreciated on the same 10. 1/08/2020 Ck #1006 11. 1/08/2020 12. 1/09/2020 13. 1/13/2020 Ck #1007 14. 1/14/2020 15. 1/14/2020 Deposit #3 16. 1/16/2020 Ck #1008 17. 1/16/2020 18. 1/20/2020 Deposit #4 19. 1/22/2020 Ck #1009 20. 1/23/2020 21. 1/23/2020 22. 1/26/2020 Ck #10101 23. 1/26/2020 Ck #1011 24. 1/27/2020 Deposit #5 25. 1/27/2020 Ck #1012 26. 1/30/2020 27. 1/30/2020 28. 1/30/2020 Ck #1013 OCIETY basis as the computer equipment. The depreciation will be calculated in the adjusting journal entries. Purchased $450 of office supplies for cash from Office Supplies Co. Purchased $8,000 of merchandise inventory (surfboards) on account. The vendor did not extend credit terms. Purchased $6,000 of merchandise inventory (wakeboards) on account. There were no credit terms for prompt payment. Mr. Maverick received and paid the $940 charge from lawyer. Maverick's Boards is now open for business. Sold merchandise for $7,200 cash. Sales Tax was $594. The cost of the Surfboards is $3,000; the cost of the Wakeboards is $1,100. Part of this sale must be delivered to the customer. The merchandise will be shipped FOB destination. Paid $250 to ship the merchandise. Purchased additional surfboards on account for $4,500. Credit terms were 2/15, n/30. Recorded cash sales that totaled $8,300. Sales tax is $685. The cost of merchandise sold was $4,500 (surfboards were $2,500; wakeboards were $2,000). Mr. Maverick joined the El Paso Chamber of Commerce. He paid the registration fee of $200. Mr. Maverick participated in a surfboard exhibition held at the convention center. He felt this was a good way to publicize his new business. Convention Center charged Mr. Maverick $800. He will pay the bill later. He considers this an advertising and promotion expense. Mr. Maverick paid the Convention Center rental, Paid for the wakeboards purchased on 1/09/2020. Mr. Maverick recorded cash sales totaling $9,000. Sales tax is $743. The cost of the merchandise sold was $4,500 (surfboards $3,000; wakeboards $1,500). Paid the balance due for the surfboards. There are two invoices. American Express sent bill for $235 for gasoline. This was automatically deducted from Blaise's checking account as a debit memo. Received but did not pay the utility bill for the month, $445 Paid the first monthly instaliment on the computer equipment. The payment amount is 5910. Of this amount, $43.33 is for interest and $866.67 is for principal. 29. 1/30/2020 Deposit #6 30. 1/31/2020 Ck #1014 1/31/2020 Ck #1015 31. OCIETY Recorded sales made for the last week of the month. Sales tax is $248. Total cash sales were $3,000. The cost of the merchandise sold was $1,800 (surfboards $1,100; wakeboards $700). Paid the sales tax to the proper taxing authority. Declared and paid a cash dividend of $650 to Mr. Maverick. WELLS FARGO BANK STATEMENT "Maverick's Boards" Balance, beginning Deposits and other credits Checks and other debits Balance on statement date 1003 1004 01/01/2020 January January 01/31/2020 1005 1006 Deposits Added Deposit 1 1/2/2020 1/5/2020 Deposit 2 1/20/2020 Deposit 3 1/23/2020 Deposit 4 1/28/2020 Deposit 5 Wells Fargo Bank Statement - Checks Paid and other Debts 1001 $9.000 1007 1002 $4,000 1008 $1,100 1009 $14,600 1011 $70,000 $10,000 $7,794 $8,985 $9,743 $490 $250 $200 $6.000 $750 DM $70 $450 DM $235 Debit Memo *Assume any errors are made by the bank. Check Printing Fee $0 $106,522 $37,145 $69,377 Part Four Instructions In this part of the practice set, the student will prepare a Bank Reconciliation for the month of January. Prepare it in Word or Excel and use the ending balance in your cash account for the cash for your books. Be prepared to turn in the Bank Reconciliation after answering the questions in Blackboard. Requirements 1. Make sure you have corrected any errors on your journal and adjusting journal entries and have the correct balance for the cash account before starting the Bank Reconciliation. 2. Bank Reconciliation: Using the cash balance per books and the bank statement, prepare a bank reconciliation. A template you can use to create a Bank reconciliation is located at the back of this practice set. 3. Record Bank Reconciliation Adjustments: After you have prepared the bank reconciliation you must make any adjusting journal entries to your cash account by entering them in the general journal of the practice set so that the general ledger cash account agrees with the bank reconciliation. Bank Statement Part 4: Prepare a Bank Reconciliation using the Bank Statement and the template below. Wells Fargo Bank Balance Ending Cash Balance Deposits in Transit Outstanding Checks Adjustments or Errors +/- Reconciled Balance Template for Bank Reconciliation "Maverick's Boards" Ending Cash Balance Adjustments or Errors +/- Reconciled Balance Transactions 2. 3. 4. 5. 6. 7. 8. 9. Date 1/02/2020 Deposit No. /Check No. 1/02/2020 Deposit #1 1/03/2020 Ck #1001 1/03/2020 Ck #1002 1/03/2020 1/05/2020 Deposit #2 1/05/2020 Ck #1003 1/06/2020 Ck #1004 1/06/2020 Ck #1005 Description Blaise met with his lawyer and CPA for advice on starting the business. The lawyer told Mr. Maverick to register the company name Maverick's Boards with the County of El Paso. In addition, Mr. Maverick will get an employer identification number (EIN) from the Internal Revenue Service and get a sales tax permit from the state of Texas. Mr. Maverick opened a business checking account at Wells Fargo Bank by depositing $70,000. The corporation issued him a stock certificate for 7,000 shares of common stock with no par value. Mr. Maverick signed a one-year rental. He was required to pay $9,000 for rent for the months of January 1, 2020- June 30, 2020. Arranged for a general business liability insurance policy and paid $4,000 to State Penn Insurance. This premium is for twelve months coverage. Purchased a new computer system that cost $5,200 from Computer Inc. for use in the business. Mr. Maverick signed a 6 month, 10% note payable for the cost of the system. The computer system has an estimated useful life of five years the residual (salvage) value is $400. This will be recorded as Computer Equipment. Depreciation will be an adjusting entry using straight- line depreciation. Signed a note payable to borrow $10,000 from Wells Fargo bank. Interest is 12% annually and the note is to be repaid with interest in twelve months. Interest will be an adjusting entry. Paid $1,100 for shipping supplies. Paid $14,600 for furniture and fixtures. The estimated service life of these assets is 8 years. The residual (salvage) value is $200. These items will be recorded as Furniture and Fixtures and depreciated accordingly. Depreciation will be done in the adjusting journal entries using straight-line depreciation. Arranged for Sun City Movers to make the delivery of the computer system and paid the delivery charge of $750. This charge should be added to the cost of the computer equipment purchased and depreciated on the same 10. 1/08/2020 Ck #1006 11. 1/08/2020 12. 1/09/2020 13. 1/13/2020 Ck #1007 14. 1/14/2020 15. 1/14/2020 Deposit #3 16. 1/16/2020 Ck #1008 17. 1/16/2020 18. 1/20/2020 Deposit #4 19. 1/22/2020 Ck #1009 20. 1/23/2020 21. 1/23/2020 22. 1/26/2020 Ck #10101 23. 1/26/2020 Ck #1011 24. 1/27/2020 Deposit #5 25. 1/27/2020 Ck #1012 26. 1/30/2020 27. 1/30/2020 28. 1/30/2020 Ck #1013 OCIETY basis as the computer equipment. The depreciation will be calculated in the adjusting journal entries. Purchased $450 of office supplies for cash from Office Supplies Co. Purchased $8,000 of merchandise inventory (surfboards) on account. The vendor did not extend credit terms. Purchased $6,000 of merchandise inventory (wakeboards) on account. There were no credit terms for prompt payment. Mr. Maverick received and paid the $940 charge from lawyer. Maverick's Boards is now open for business. Sold merchandise for $7,200 cash. Sales Tax was $594. The cost of the Surfboards is $3,000; the cost of the Wakeboards is $1,100. Part of this sale must be delivered to the customer. The merchandise will be shipped FOB destination. Paid $250 to ship the merchandise. Purchased additional surfboards on account for $4,500. Credit terms were 2/15, n/30. Recorded cash sales that totaled $8,300. Sales tax is $685. The cost of merchandise sold was $4,500 (surfboards were $2,500; wakeboards were $2,000). Mr. Maverick joined the El Paso Chamber of Commerce. He paid the registration fee of $200. Mr. Maverick participated in a surfboard exhibition held at the convention center. He felt this was a good way to publicize his new business. Convention Center charged Mr. Maverick $800. He will pay the bill later. He considers this an advertising and promotion expense. Mr. Maverick paid the Convention Center rental, Paid for the wakeboards purchased on 1/09/2020. Mr. Maverick recorded cash sales totaling $9,000. Sales tax is $743. The cost of the merchandise sold was $4,500 (surfboards $3,000; wakeboards $1,500). Paid the balance due for the surfboards. There are two invoices. American Express sent bill for $235 for gasoline. This was automatically deducted from Blaise's checking account as a debit memo. Received but did not pay the utility bill for the month, $445 Paid the first monthly instaliment on the computer equipment. The payment amount is 5910. Of this amount, $43.33 is for interest and $866.67 is for principal. 29. 1/30/2020 Deposit #6 30. 1/31/2020 Ck #1014 1/31/2020 Ck #1015 31. OCIETY Recorded sales made for the last week of the month. Sales tax is $248. Total cash sales were $3,000. The cost of the merchandise sold was $1,800 (surfboards $1,100; wakeboards $700). Paid the sales tax to the proper taxing authority. Declared and paid a cash dividend of $650 to Mr. Maverick. WELLS FARGO BANK STATEMENT "Maverick's Boards" Balance, beginning Deposits and other credits Checks and other debits Balance on statement date 1003 1004 01/01/2020 January January 01/31/2020 1005 1006 Deposits Added Deposit 1 1/2/2020 1/5/2020 Deposit 2 1/20/2020 Deposit 3 1/23/2020 Deposit 4 1/28/2020 Deposit 5 Wells Fargo Bank Statement - Checks Paid and other Debts 1001 $9.000 1007 1002 $4,000 1008 $1,100 1009 $14,600 1011 $70,000 $10,000 $7,794 $8,985 $9,743 $490 $250 $200 $6.000 $750 DM $70 $450 DM $235 Debit Memo *Assume any errors are made by the bank. Check Printing Fee $0 $106,522 $37,145 $69,377

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