Acc205 Principles of Accounting: Module 5 (P7-42 and P8-42)

Acc205 Principles of Accounting
Module 5 (P7-42 and P8-42)

P7-42 Preparing a bank reconciliation and journal entries [20–25 min]
Draper performs systems consulting. Draper’s February Cash from its general ledger is as follows:
Cash
Jan 31 Bal 23,115 ck207 4,300 Feb 1
Feb 6 2,930 ck208 825 Feb 14
Feb 13 2,800 ck209 1,455 Feb 14
Feb 20 4,800 ck210 190 Feb 28
Feb 27 3,690 ck211 550 Feb 28
Feb 28 Unadj Bal 30,015
Draper’s bank statement dated February 28, 2013, follows:
Bank Statement for February 2013
Beginning Balance, January 31, 2013 23,510
Deposits and Other Credits:
Feb 1. 700
Feb 8. 2,930
Feb 14. 2,800
Feb 20. EFT Hip Hop Hats - a customer 400
Feb 22. 4,800
Feb 28. Interest credit 22 11,652
Checks and Other Debits:
Feb 2. EFT to Paper Products 9
Feb 2. ck#206 1,095
Feb 18. ck#207 4,300
Feb 19. ck#209 1,455
Feb 28. EFT to The Cable Co. 85
Feb 28. ck#208 825
Bank Service Charge 18 (7,787)
Ending Balance, February 28, 2013 $27,375

Requirements
1. Prepare the February bank reconciliation.
2. Journalize and post any transactions required from the bank reconciliation. Key all items by date. Compute each account balance, and denote the balance as Bal.

P8-42 Accounting for uncollectible accounts using the allowance method [15–20 min]
Draper reviewed the receivables list from the January transactions (from Chapter 6). Draper identified on February 15 that a customer was not going to pay his receivable of $200 from December 9. Draper uses the allowance method for receivables, estimating uncollectibles to be 5% of January credit sales.

Requirements
1. Journalize the entry to record and establish the allowance using the percentage method for January credit sales.
2. Journalize the entry to record the identification of the customer’s bad debt.
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