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7-122
192.
Bank reconciliation--computations and journal entry
The Cash account in the ledger of Pine Golf Club shows a balance of $11,925 at December
31, 2015. The December 31 bank statement shows a balance of $10,440. The only
reconciling items consist of:
Bank service charges of $32.
Deposit in transit of $1,813.
NSF check from customer L. Diamond in the amount of $126.
Error in recording check no. 970 for utilities: check was written in the amount of $834 but
was recorded in Pine's accounting records as $384.
Outstanding checks.
(a) What is the amount of the
adjusted
cash
balance
at December 31, 2015?
$_______________
(b) What is the total amount of outstanding checks at December 31, 2015?
$________________
(c) Record the journal entry necessary, if any, to adjust Pine's Golf Club accounting
records at December 31, 2015. (An explanation is not required; a single compound journal
entry is acceptable.)
7-124
193.
Bank reconciliation
At March 31, the balance of the Cash account according to the records of Fisher Company
was $7,261. The March 31 bank statement showed a balance of $8,798. You are to
prepare the bank reconciliation of Fisher Company at March 31, using the following
supplementary information and as per the given format:
(a.) Deposit in transit at March 31, $6,772.
(b.) Outstanding checks: no. 120, $140; no. 121, $932; no. 127, $307; no. 134, $2,200.
(c.) Service charge by bank, $50.
(d.) A note receivable for $5,050 left by Fisher Company with bank for collection that had
been collected and credited to company's account. No interest involved.
(e.) A check for $90 drawn by a customer, Stuart Sands, but deducted from Fisher's
account by the bank and returned with the notation "NSF."
(f.) Fisher's check no. 480, issued in payment of $970 worth of office equipment, correctly
written in the amount of $970 but erroneously recorded in Fisher's accounting records as
$790.
7-126
194.
Bank reconciliation
(A.) You are required to complete the June 30 bank reconciliation for Silver Company using
the following information and as per the given format:
(B.) Give in general journal form the entry or entries necessary to correct Silver's
accounting records as of June 30. (Explanations may be omitted; one compound journal
entry is acceptable.)
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195.
Marketable securities
(a.) Explain how investments in available for sale marketable securities are valued in the
investor's balance sheet.
(b.) Is valuation of investments in marketable securities consistent with (1) the cost
principle, and (2) the objectivity principle?
(c.) What does Unrealized Holding Gain (or Loss) on Investments represent? How is this
item reported in the financial statements?
7-130
196.
At December 31, 2015, Laconia Industries' portfolio of investments in available for sale
marketable securities consisted of the following:
(a.) Illustrate the presentation of marketable securities and unrealized holding gain (or
loss) in Laconia's financial statements at December 31, 2015. Indicate the financial
statement and section in which each item appears.
(b.) Assume that on March 15, 2016, Laconia made the following sales of securities:
(1) Sold 5,000 shares of its investment in Crown, Inc., at a price of $20 per share.
(2) Sold 1,000 shares of its investment in Plastic Dots at a price of $45 per share.
Compute the gain or loss recognized in Laconia's 2016 income statement for each sale:
(1). Sale of 5,000 shares of Crown: $_____________ Gain/Loss
(2). Sale of 1,000 shares of Plastic Dots: $_____________ Gain/Loss
(c.) At
December
31,
2016
, the market values of these stocks are: Crown, $21 per share;
Plastic Dots, $42 per share. Complete the following schedule showing cost and current
market value of securities owned by Laconia at the end of 2016.
(d.) Illustrate the presentation of marketable securities and unrealized holding gain (or
loss) in Laconia's financial statements at December 31, 2016. (Follow same format as in
part a.)
