BUS 257 Midterm (UWO) Study Sheet
Bank Reconciliation
Definition:
A statement that allows one to compare their personal bank account records to the bank's records of the one's account balance in order to uncover any
possible discrepancies. The goal of reconciliation is to determine if the discrepancy is due to error rather than timing.
Steps to Putting Together a Bank Reconciliation Statement:
1)
2)
3)
4)
5)
Compare Bank Statement with Cash Receipts
Compare Bank Statement with Cash Disbursements
Compare Bank Statement with Outstanding Cheques
Start to build your Bank Reconciliation Statement
Make adjusting entries
ABC Inc Ltd.
Bank Reconciliation
As at December 31, 2004
Balance Per Company Balance Sheet
Balance, DATE (beginning)
ADD:
Cash Receipts
LESS: Cash Disbursements
50,000
15,000
- 10,000
$
5,000
55,000
-$
21,000
$
24,000
58,000
Balance
LESS:
NSF Chq/ Debit Memos
Unrecorded Chq #
Driver Payroll
Bank Service Charge
Loan payment
Error in Chq (if we understated)
ADD:
Interest Earned
*Error in Chq (we overstated)
Credit Memos
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Adjusted Cash Balance
Balance Per Bank Statement:
Bank Statement Balance - Date
LESS:
Outstanding Chq # 1
Outstanding Chq # 2
Outstanding Chq # 3
50,000
-
3,000
6,000
9,000
-
ADD:
Late Deposit # 1
Late Deposit # 2
18,000
12,000
14,000
26,000
Adjusted Cash Balance
$
58,000
Possible causes of a bank balance error:
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Total outstanding checks added incorrectly
Total deposits in transit added incorrectly
Bank balance written down incorrectly
Failed to record all items clearing the bank statement
Journals added incorrectly
Failed to record a check or deposit
Incorrectly recorded an amount
More free study sheet and practice tests at:
Accounts Receivable
Formulas:
¾
¾
¾
Net Credit Sales = Tot. Gross CR Sales – CR Sales R&A – CR Sales Dis.
Net Cash Sales = Tot. Gross Cash Sales – Cash Sales R&A – Cash Sales Dis.
Net Realizable value = E/B for A/R – E/B for A4DA
2 Approaches to Estimating Bad Debt Expense:
Approach
Account Used
Solve for
Formula
Balance Sheet
Accounts Receivable
A4DA ending balance
% outstanding x E/B for A/R
Income Statement
Net Credit Sales
Bad Debt Expense
% outstanding x total net credit sales
More free Study Sheets and Practice Tests at: www.prep101.com
www.prep101.com
More free study sheets and practice tests at
Inventories
2 Types of FOB:
FOB Type
Meaning
Freight paid by
FOB Destination
Shipping TO…
Supplier
FOB Shipping Point
Shipping FROM
Buyer
4 Inventory Methods:
1. LIFO (Last in, first out)
2. FIFO (First in, first out)
3. Specification Identification Method
4. Weighted Average Cost Method
Solving E/B in inventory to find COGS:
5. LIFO – E/B is what’s left in the OLDEST purchases
6. FIFO – E/B is what’s left in the NEWEST purchases
7. Specification Identification Method – Physical Inventory Counts Exhibit Will be given
8. WAC – COGA4S/ UA4S
Inventory
O/B
+ Purchases
+ Taxes & Duties
+ Transportation-in
- Purchase Returns &
Allowances
- Purchase Discounts
COGA4S
COGS
COGS Expense
E/B
COGS
Manufacturing Accounting
Depreciation Methods & Formulas:
¾
Straight line = (HC – SV)/a *n/12
Double Declining = BV * 2/a *n/12
Don’t need to subtract SV! But need to subtract A/D in 2nd year!
¾
Units of output = (HC – SV)/ units available * units used
Entry Type
List of Entries
Adjusting
ƒ
Disposals
ƒ
Drawings
ƒ
Extraordinary Repairs
ƒ
Insurance
ƒ
Loan
ƒ
Rent
ƒ
Salary & Wages
ƒ
Tear down
ƒ
Trade-in
ƒ
Unpaid bills
Closing
ƒ
Sales
ƒ
Expenses
ƒ
Retained Earnings
Production
ƒ
Raw Materials
ƒ
WIP
ƒ
Finished Goods
More free study sheet and practice tests at:
RM
O/B
Purchases
Trans-In
Returns
Allowances
Discounts
WIP
O/B
FOH - Rent
FOH - Utilities
FOH - Equip
FOH - Insurance
DL - Wages
E/B
CORMU
COWIP
COFGM
E/B
COGS
E/B
COGS Expense
COGS
CORMA4U
CORMU
FG
O/B
COGFM
COGA4S
Steps:
1) Find E/B of RM to solve for CORMU
2) Find E/B of WIP to solve for COFGM
3) Find E/B of FG to solve for COGS
Helping students since 1999