Question

#1: On January 1, 2017, the balance in Great Lakes Co.'s Allowance for Bad Debts account was $15,600. During the year, a total of $10,500 of delinquent accounts receivable were written off as bad debts. The balance in the Allowance for Bad Debts account at December 31, 2017, was $21,900.

(a.) What was the total amount of bad debts expense recognized during the year?
(b.) As a result of a comprehensive analysis, it is determined that the December 31, 2017, balance of Allowance for Bad Debts should be $18,900. Show, in general journal format the adjustment required.

#2: Prepare a bank reconciliation for Show Me, Inc., as of June 30 from the following information:

(a.) The June 30 balance shown on the bank statement is $5,796.
(b.) Outstanding checks at June 30 totaled $330.
(c.) A deposit of $424 made on June 30 was not included in the balance shown on the bank statement.
(d.) The bank statement contained an adjustment of $410 for a note receivable collected by the bank on behalf of Show Me, Inc. ($382 principal and $28 interest).
(e.) A bank charge of $34 was made to the account during June. Although the company was expecting a charge, the amount was not known until the bank statement arrived.
(f.) The bank erroneously charged a $340 check of Shirt, Inc., against the Show Me, Inc., bank account.
(g.) The June 30 balance in the general ledger Cash account, before reconciliation, is $6,026.
(h.) The bank statement included a notice that a customer's check for $172 that had been deposited on June 14 had been returned NSF.

Required:

(1.) Prepare the bank reconciliation for Show Me, Inc., as of June 30.
(2.) Prepare the appropriate adjusting entry(ies) or show the reconciling items in a horizontal model, for Show Me, Inc., related to the bank reconciliation.

Answer 1