Explain briefly need and importance of bank reconciliation

Assignment Help Accounting Basics

Reference no: EM132564159

ACC 101 Accounting principles - Emirates College of Technology

Learning Outcome 1: Prepare general journal entries for merchandize operations using periodic inventory systems.

Learning Outcome 2: Compute the cost of inventory and cost of goods sold by using periodic systems using: First-In First-Out, Last-In First-Out, and Weighted Average and estimate the value of an inventory using the retail method and the gross profit method.

Learning Outcome 3: Differentiate operations related to petty cash funds and createbank reconciliationstatement.

Learning Outcome 4: Determine the cost of plant assets and Compute depreciation by using straight line, declining balance and units of production depreciation methods.

Question 1:

ABC Co uses the peridic inventory system. During June, the following transactions occurred for ABC compagny :
1- June 1 Purchased 200 units of goods 50$ each one from Ahmed Co, terms 2/10, n/30.

2- June 3 Received credit of 3,000 $ for the return of 60 units purchased on June 1 that were defective.

3- June 5,ABC. sold goods 100 units at selling price 80 $ per unit to SigmaCo. on account 2/10 n, 30. FOB destination.

4- June 6 , ABC Co. paid cash 300 $ freight expenses on June 5 sales.

5- June 10,ABC paid the net due to Ahmed Co.

6- June 20, received cash from Sigma Co.

Instructions: 1. Journalize the June transactions for ABC company using the periodic inventory system.

2. Explain the importance of physical inventory operation at the year end.

Question 2:

Beta Company uses the periodic inventory system to account for inventories. Information related to Beta Company's inventory at October 31 is given below:

October 1 Beginning inventory 400 units @ $10.00 = $ 4,000

8 Purchase 800 units @ $10.40 = 8,320

16 Purchase 600 units @ $10.80 = 6,480

24 Purchase 200 units @ $11.60 = 2,320

Total units and cost 2,000 units $21,120

Instructions:

1. Show computations to value the ending inventory and cost of goods sold using the FIFO cost assumption if550 units remain on hand at October 31.

2. Show computations to value the ending inventory and cost of goods sold using the weighted-average cost method if 550 units remain on hand at October 31.

3. Show computations to value the ending inventory and cost of goods sold using the LIFO cost assumption if550 units remain on hand at October 31.

4. As a qualified accountant you are required to advise the company for which inventory method of valuation to use? Give examples.

Question 3:

Sigma developed the following information in recording its bank statement for the month of March.
Balance per books March 31 $ 7,905
Balance per bank statement March 31 $15,900
(1) Checks written in March but still outstanding $7,000.
(2) Checks written in February but still outstanding $2,800.
(3) Deposits of March 30 and 31 not yet recorded by bank $5,200.
(4) NSF check of customer returned by bank $1,200.
(5) Check No. 210 for $594 was correctly issued and paid by bank but incorrectly entered in the cash payments journal as payment on account for $549.
(6) Bank service charge for March was $50.
(7) A payment on account was incorrectly entered in the cash payments journal and posted to the accounts payable subsidiary ledger for $824 when Check No. 318 was correctly prepared for $284. The check cleared the bank in March.
(8) The bank collected a note receivable for the company for $4,000, $150 interest revenue, fees $ 50 .

Instructions:
1. Prepare bank reconciliation at March 31.
2. Explain briefly the need and importance of bank reconciliation.

Question 4:

Teta Company purchased a machine at a cost of $ 105,000 on 30/9/2019. The machine is expected to have a $5,000 salvage value at the end of its 5-year useful life.

Instructions:
1- Compute the depreciation rate.
2- Using the straight-line method, prepare a depreciation schedule, showing the annual depreciationexpense for the machine over its 5-years life.
3- Record the depreciation expense on 31/12/2019 in the general journal.
4- In your opinion, how the depreciation method is chosen/applied by companies.

Referencing as Harvard Style

Attachment:- Accounting principles.rar

Reference no: EM132564159

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