Bank Reconciliation Help

Question

Could anyone explain this problem?

1.                Accrued interest earned but not yet collected on the investments account (account #150) balance has been calculated to be $4,000.

Accrued interest on the note receivable that originated on December 1 (to Woodson Corp.) needs to be calculated and recorded. Interest calculations should be rounded to the nearest whole month and dollar. Lent $50,000 in cash to one of its suppliers (Check #501 payable to Woodson Corp). The supplier signed a 1-year, 12% promissory note with a face value of $50,000. The note’s face value plus interest is due on 12/1/X6.

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3.                Wolfpack uses the percentage of accounts receivable method to estimate bad debts. Wolfpack estimates that 3% of its ending gross receivable balance is uncollectible. This amount is 1,240

4.                A physical count shows the ending inventory balance at 12/31/X5 should be $100,000. Important Note: When making the year-end adjustment, Wolfpack debits the “Inventory” account for the ending balance and credits “Inventory” for the beginning balance.

5.                An end of year analysis of its insurance policies shows that the balance still prepaid on December 31, 20X5 should be $2,000.

6.                An end of year analysis of its rental agreements (as a lessee) shows that the balance still prepaid on December 31, 20X5 should be $4,000.

7.                Depreciation expense on the buildings is $35,000 for the year. Note: Wolfpack has separate depreciation expense and accumulated depreciation accounts for its buildings and equipment. See the chart of accounts.

8.                Depreciation expense on the equipment is $20,000 for the year.

9.                Amortization on the patent is $25,000 for the year. Note: The company credits the “Patent” account directly when recording amortization expense.

10.              Supplies on hand at 12/31/X5 total $3,000.

11.              Accrued interest on all notes payable for the month of December has been calculated to be

$4,650. This interest will be paid in 20X6.

12.              Wolfpack accrues a $5,000 bonus to its manager for benchmarks the company met during 20X5. The bonus will be paid in January of 20X6. Note: Bonuses to employees are considered to be a form of compensation.

Answer 1

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