Smash Company has asked for your assistance in reconciling the company's 12/31st cash balance and while...

 

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Smash Company has asked for your assistance in reconciling the company's 12/31st cash balance and while doing so you discover the following items: Per the December bank statement: (i) $12 of interest income earned in December. (ii) $35 in total for December bank service fees. $15 is the monthly service fee and $20 extra was assessed due to a $2,300 deposit (made by Smash earlier in December) and reported on the December bank statement as NSF. ($20+ $15 = $35). (iii) Check # 2315 represented payment by Smash to a local repair company (Bash Repair Services "BRS") for a December service call on the company's copy machine. The amount owed to Bash for the service call was $445 but the clerk, while writing the check, was distracted by chatting with the repair tech and erroneously wrote check # 2315 for $454. Unaware of this error the clerk recorded the payment within the accounting records as follows: Repair Expense (dr) $445.00 Cash (cr) $445.00 (iv) Smash noted that $3,000 of checks written in December were not reported on the December bank statement, and check #2280 written for $200, and shown as outstanding in November, was also not included. (v) The last deposit of the month for $1,800, was made after 4 pm on December 31, and was not included on the December bank statement. Assume Smash reported a December 31st unadjusted cash balance of $22,430. Consider the $35 of service fees reported on the bank statement (item (ii) above), and select the true statement below. O Item (ii) would result in the bank's issuance of both debit and credit memorandums. O Item (ii) would result in the bank issuing one or more credit memorandums but no debit memorandums. O Item (ii) would result in the bank issuing one or more debit memorandums but no credit memorandums. O The situation described in item (ii) would require the bank to issue both debit and credit memorandum(s). Smash Company has asked for your assistance in reconciling the company's 12/31st cash balance and while doing so you discover the following items: Per the December bank statement: (i) $12 of interest income earned in December. (ii) $35 in total for December bank service fees. $15 is the monthly service fee and $20 extra was assessed due to a $2,300 deposit (made by Smash earlier in December) and reported on the December bank statement as NSF. ($20+ $15 = $35). (iii) Check # 2315 represented payment by Smash to a local repair company (Bash Repair Services "BRS") for a December service call on the company's copy machine. The amount owed to Bash for the service call was $445 but the clerk, while writing the check, was distracted by chatting with the repair tech and erroneously wrote check # 2315 for $454. Unaware of this error the clerk recorded the payment within the accounting records as follows: Repair Expense (dr) $445.00 Cash (cr) $445.00 (iv) Smash noted that $3,000 of checks written in December were not reported on the December bank statement, and check #2280 written for $200, and shown as outstanding in November, was also not included. (v) The last deposit of the month for $1,800, was made after 4 pm on December 31, and was not included on the December bank statement. Assume Smash reported a December 31st unadjusted cash balance of $22,430. Consider the $35 of service fees reported on the bank statement (item (ii) above), and select the true statement below. O Item (ii) would result in the bank's issuance of both debit and credit memorandums. O Item (ii) would result in the bank issuing one or more credit memorandums but no debit memorandums. O Item (ii) would result in the bank issuing one or more debit memorandums but no credit memorandums. O The situation described in item (ii) would require the bank to issue both debit and credit memorandum(s).

Answer rating: 100% (QA)

Assume Smash reported a December 31st unadjusted cash balance of 22430 Consider the 35 of service fe... View the full answer