Ba220 exercise 6-7a, 6-10a and 6-11a exercise 6-7a treatment of nsf

BA220 Exercise 6-7A, 6-10A and 6-11A

Exercise  6-7A Treatment Of NSF check

The bank statement of Stone Supplies included a $300 NSF check that one of Stone’s customer had written to pay for services that were provided by Stone.


a. Show the effects of recognizing the NSF check on the financial statements by recording

 the appropriate  amounts in a horizontal statements model like the following one:

Net Inc.= Lis& + EquityRev. — Exp. =    Cash Flo,.

b. Is the recognition of the NSF check on Stone’s books an asset source, use, or exchange


c. Suppose the customer redeems the check by giving Stone $325 cash in exchange for the bad check. The additional S25 paid a service fee charged by Stone. Show the effects on the financial statements in the horizontal statements model in Requirement a.

d.            Is the receipt of cash referred to in Requirement can asset source, use, or exchange transaction

e.            Record in general journal form the adjusting entry for the NSF check and the subsequent entry for redemption of the check by the customer.


Exercise 6-10A  Adjusting the cash account

As of may  31. 2013. the bank statement showed an ending balance of $26.100. The unadjussed  cash amount balance was $27350. The following information is available  

1.      Deposit in transit. $6,981.

2.      Credit memo in bak statement for interest earned May, $36.

3.      outstanding check. $5,720.

4.      debit memo for service charge, $25.


a.      Determine  the true cash balance by preparing  a bank reconciliation as of May 31,2013.

using the preceding information.

b.      Record in general journal format the adjusting entries necessary to correct the unadjusted book balance.


Exercise 6-11A  Determining  the true cash balance, starting with the unadjusted bank balance

The following information is available for Young Company for the month of August:

1.            The unadjusted balance per the bank statement on August 31 was S35.100.

2.            Deposits in transit on August 31 were $3,750.

3. A debit memo was included with the bank statement for a service charge of S35.

4.            A $2120 check writ ten in August had not been paid by the bank.

5.            The bank statement included a $1,550 credit memo for the collection of a note. The principal of the note was $1,500, and the interest collected was $50.


determine the true cash balance as of August 31. (Hint: It is not necessary to use all of the Aveding items to determine the true balance.)


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