Red Company received the following October 31, 20X3, bank statement:

\begin{array} { | l | r | r | } \hline & \text { Transactions } & \text { Balance } \\\hline \text { Balance, September 30 } & & \$ 18,000 \\\hline \text { Deposits recorded during October } & \$ 40,000 & 58,000 \\\hline \begin{array} { l } \text { Customer note collected for Red Company } \\\text { (including \$120 interest) }\end{array} & 2,520 & 60,520 \\\hline \text { Cheques cleared during October } & 38,300 & 22,220 \\\hline \text { NSF cheque (given to Red by a customer) } & 100 & 22,120 \\\hline \text { Bank service charges } & 15 & 22,105 \\\hline \text { Balance, October 31 } & & 22,105 \\\hline\end{array}

The cash account reflected the following for October:

\begin{array} { | l | r | } \hline & \text { CASH ACCOUNT } \\\hline \text { September 30 balance } & \$ 20,500 \\\text { October cash deposits } & 38,000 \\\hline \text { October cheques written } & \$ 38,600 \\\hline \text { October 31 balance } & \$ 19,900 \\\hline\end{array}

The September 30 bank reconciliation showed: Deposits in transit, $3,000, and outstanding cheques, $500 . Required:
A. What was the amount of the deposits in transit at October 31?
B. What was the amount of outstanding cheques at October 31?
C. Prepare a bank reconciliation for October. Use the following format:

\begin{array} { | l | l | l | l | } \hline \text { Book Balance of Cash } & \$ & \text { Bank Statement Balance } & \$ \\\hline \text { Additions } & & \text { Additions } & \\\hline & & & \\\hline & & & \\\hline \text { Deductions } & & \text { Deductions } & \\\hline & & & \\\hline & & & \\\hline \text { Correct Cash Balance } & \$ & \text { Correct Cash Balance } & \$ \\\hline\end{array}

D. Give the journal entries that should be made by Red Company based on the bank reconciliation.

For Sellers of Goods, the Revenue Recognition Principle Generally Requires

Multiple Choice

Correct Answer:VerifiedUnlock this answer nowGet Access to more Verified Answers free of chargeAccess For Free

Correct Answer:
Verified
Unlock this answer now
Get Access to more Verified Answers free of charge