Maple Industries Inc. deposits all cash receipts on the day when they are receiv
ID: 2487799 • Letter: M
Question
Maple Industries Inc. deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on December 31, its Cash account shows a debit balance of $18,903. The company’s bank statement as of June 30 shows an ending cash balance of $16,161. The following information was also available.
• Outstanding checks as of December 31 total $2,381.
• Included with the bank statement was a debit memo in the amount of $95 for service charges.
• Check No. 2519, listed with the canceled checks, was correctly drawn for $865 in payment of a utility bill on December 16. The company mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $970.
• The December 31 cash receipts of $3,725 were placed in the bank’s night depository after banking hours and were not recorded on the December 31 bank statement.
• The bank deducted $1,252 for an NSF check from a customer deposited on December 10. Required: Prepare the journal entries for the items that would appear on the company’s bank reconciliation as of December 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Journal Entry Question:
A. Record payment of utility bill of $865 as mistakenly $970 debiting utility bill and crediting cash.
B. Record an amount of $1,252 deducted for an NSF check from customer deposited on December 10.
C. Record a debit memo of $95 for service charges.
Explanation / Answer
A) Cash Dr 105 Utilities Cr 105 ( to record correction of incorrect recording of utility bill 970-865) B) Accounts receivable Dr 1252 Cash Cr 1252 ( To record NSF check from a customer) C) Service charges Dr 95 Cash Cr 95 ( To record service charges by bank)