DO IT ABC Co. is preparing its November 30, 2020 bank reconciliation. The following information was determined. a. The cash balance per books is P500,000 while cash balance per bank statement is P530,000. b. The bank collected P640,000 from a customer, representing P600,000 principal of note receivable and P40,000 interest. c. NSF check of P150,000 returned by the bank to ABC. ABC Co. not yet recorded the return of the check. d. Collections amounting to P310,000 were deposited by month end but were not yet reflected on the bank statement. e. Checks issued totaling P60,000 are not yet presented to the bank for payment. f. A book error caused the debits to be overstated by P120,000. g. The bank error caused the debits to be overstated by P90,000.

DO IT ABC Co. is preparing its November 30, 2020 bank reconciliation. The following information was determined. a. The cash balance per books is P500,000 while cash balance per bank statement is P530,000. b. The bank collected P640,000 from a customer, representing P600,000 principal of note receivable and P40,000 interest. c. NSF check of P150,000 returned by the bank to ABC. ABC Co. not yet recorded the return of the check. d. Collections amounting to P310,000 were deposited by month end but were not yet reflected on the bank statement. e. Checks issued totaling P60,000 are not yet presented to the bank for payment. f. A book error caused the debits to be overstated by P120,000. g. The bank error caused the debits to be overstated by P90,000.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter8: Sarbanes-oxley, Internal Control, And Cash

Section: Chapter Questions

Problem 18E

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Researching GAAP Situation Hamilton Company operates in an industry with numerous competitors. It is experiencing a shortage of cash and decides to obtain money from a large bank by using some of its receivables as collateral. Hamilton pledges 5100,000 of its receivables, is charged a 12% fee on this amount, and notifies these credit customers to make their payments directly to the bank. Hamilton transfers the receivables to the bank, and the bank assumes the servicing activities, but Hamilton is responsible for all bad debts which it reasonably estimates to be 2% of the receivables amount. When the balance of the receivables pledged is reduced to 3,000, Hamilton is required to repurchase the receivables, notify the remaining credit customers to make payments to it, and reassume the servicing activities. The bank has the right to sell the receivables, except to Hamiltons major competitor. Hamiltons president has asked you how to account for (and record) this transaction. Directions Research the related generally accepted accounting principles and prepare a short memo to the president that answers his question. Cite your reference and applicable paragraph numbers.
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