On October 31 Juanita Ortega, owner of Outback Guide Service, received a bank statement dated October 30. Juanita found the following: 1. The checkbook has a balance of $2,551.34. 2. The bank statement shows a balance of$2,272.36. 3. The statement shows a bank service charge of $20.00. 4. A check from Podaski Systems for$62.44, deposited on October 18, was returned by the bank. There is no fee for handling the NSF check. 5. A deposit of $672.48 made on October 30 does not appear on the bank statement. 6. These checks are outstanding: Check 872 for$126.84 Check 883 for $192.80 Check 881 for$87.66 Check 887 for 68.64 Using the preceding information: 1. Record the service charge and the NSF check in the checkbook. 2. Reconcile the bank statement. 3. Record the service charge and NSF check on page 7 of the general journal. 4. Post the journal entries to the appropriate general ledger accounts.

Juanita Ortega is the owner of a professional guide service called Outback Guide Service. Use a form similar to the one below. Complete these steps for each of the following transactions: 1. Identify the accounts affected. 2. Write the amount of the increase (+) or decrease (-) in the space provided on the form in your working papers. 3. Determine the new balance for each account.

$$\begin{matrix} \text{ } & \text{ } & \text{ } & \text{Assets} & \text{ } & \text{ } & \text{$=$} & \text{Liabilities} & \text{$+$} & \text{Owner’s Equity}\\ \hline \text{Trans.} & \text{Cash in} & \text{Accts.} & \text{Hiking} & \text{Rafting} & \text{Office} & \text{$=$} & \text{Accounts} & \text{$+$} & \text{Juanita}\\ \text{ } & \text{Bank} & \text{Rec.} & \text{Equip.} & \text{Equip.} & \text{Equip.} & \text{ } & \text{Payable} & \text{ } & \text{Ortega,}\\ \text{ } & \text{ } & \text{ } & \text{ } & \text{ } & \text{ } & \text{ } & \text{ } & \text{ } & \text{Capital}\\ \end{matrix}$$

$$\begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{Jan. 3} & \text{1. Ms. Ortega, the owner, opened a checking account for the business by depositing $\$60,000$ of her personal funds.}\\ \text{6} & \text{2. Paid by check the monthly rent of $\$3,000$.}\\ \text{8} & \text{3. Bought hiking equipment for the business by writing a check for $\$3,000$.}\\ \text{9} & \text{4. Purchased $\$24,000$ of rafting equipment by writing a check. }\\ \text{11} & \text{5. Purchased office equipment on account for $\$4,000$.}\\ \text{15} & \text{6. Received payment for guide services, $\$2,500$.}\\ \text{18} & \text{7. Ms. Ortega contributed a desk valued at $\$450$ to the business.}\\ \text{21} & \text{8. Withdrew $\$3,000$ cash from the business for personal use.}\\ \text{26} & \text{9. Wrote a check to a creditor as partial payment on account, $\$1,500$. }\\ \text{30} & \text{10. Took a group on a tour and agreed to accept payment later, $\$1,200$.}\\ \end{array}$$

Juanita Ortega operates Outback Guide Service. She uses the following accounts to record and summarize her business transactions.

$$\begin{array}{ll} \text{General Ledger} & \text{ }\\ \hline \text{101 Cash in Bank} \\ \text{301 Juanita Ortega, Capital}\\ \text{105 Accounts Receivable}-\text{Mary Johnson}\\ \text{302 Juanita Ortega, Withdrawals}\\ \text{401 Guide Service Revenue}\\ \text{150 Rafting Equipment}\\ \text{505 Maintenance Expense}\ \text{205 Accounts Payable}-\text{Peak Equipment Inc.}\\ \text{515 Rent Expense}\\ \text{520 Utilities Expense}\\ \end{array}$$

The chart of accounts for Outback Guide Service follows.

$$\begin{array}{ll} \mathbf{\text{General Ledger }} & \text{ }\\ \text{101 Cash in Bank} & \text{301 Juanita Ortega, Capital}\\ \text{115 Accts. Rec. - Podaski} & \text{302 Juanita Ortega, Withdrawals}\\ \text{Systems Inc.} & \text{401 Guide Service Revenue}\\ \text{140 Computer Equipment} & \text{501 Advertising Expense}\\ \text{145 Hiking Equipment} & \text{ }\\ \text{150 Rafting Equipment} & \text{ }\\ \text{205 Accts. Pay. - Peak Equipment Inc.} & \text{ }\\ \text{207 Accts. Pay. - Premier Processors} & \text{ }\\ \end{array}$$

1. In your working papers, open an account in the general ledger for each account in the chart of accounts. 2. Record the following transactions on page 1 of the general journal. 3. Post each journal entry to the appropriate accounts in the ledger. 4. Prove the ledger by preparing a trial balance.

$$\begin{array}{rl} \text{Date} & \text{Transactions}\\ \text{Mar. 1} & \text{Invested \$20,000 in cash and transferred rafting equipment }\\ \text{ } & \text{valued at \$5,000 to the business, Memorandum 35.}\\ \text{3} & \text{Purchased \$600 in hiking equipment on account from Peak}\\ \text{ } & \text{Equipment Inc., Invoice 101.}\\ \text{5} & \text{Bought a \$2,800 computer from Premier Processors and agreed}\\ \text{ } & \text{to pay for it within 60 days, Invoice 616.}\\ \text{7} & \text{Deposited \$700 cash received from clients, Receipts 310–315.}\\ \text{9} & \text{Paid \$400 to the Daily Courier for an ad, Check 652.}\\ \text{12} & \text{Sent a bill for \$900 to Podaski Systems Inc. for conducting a}\\ \text{ } & \text{group rafting trip for them, Sales Invoice 352.}\\ \text{15} & \text{Juanita Ortega wrote a check for \$800 for personal use, Check 653.}\\ \text{18} & \text{Paid Premier Processors \$1,400 to apply on account, Check 654.}\\ \text{22} & \text{Received \$900 from Podaski Systems Inc. in full payment for}\\ \text{ } & \text{the amount owed, Receipt 316.}\\ \text{27} & \text{Bought a \$500 television ad with LIVE TV, Check 655.}\\ \text{28} & \text{Paid Peak Equipment Inc. \$600 by writing Check 656. }\\ \end{array}$$

Calculate the total change in accounts payable.

On October 20 Job Connect received its bank statement dated October 18. 1. The checkbook balance on October 20 is $880.84. 2. The ending bank statement balance is$344.58. 3. A $14.00 service charge appears on the bank statement. 4. The following checks are outstanding: Check 864$ 88.41 Check 869 69.34 Check 871 $129.88 Check 873 14.25 5. A$68.42 check from Tom McCrary deposited on October 13 was returned by the bank for insufficient funds. The bank charged Job Connect’s account $7.00 for the NSF check. No journal entry was made for the NSF check. 6. A$938.72 deposit on October 19 is not on the bank statement. 7. A check for $200.00 to Fontenot Inc. was lost in the mail and has not been deposited. A stop payment order, which cost$10.00, was issued on October 15. No new check was issued. Reconcile the bank statement using the account form in your working papers.

As the accounting clerk for Hot Suds Car Wash, you write checks and make deposits. The current checkbook balance is $3,486.29. For each transaction: 1. Record the necessary information on the check stub. Determine the new balance and carry the balance forward. 2. Prepare the necessary checks and sign your name as drawer.$

$$\begin{array}{ll} \text{Date} & \text{Transactions}\\ \text{Oct. 3} & \text{Issued Check 504 for \$868.45 to Custom Construction for}\\ \text{ } & \text{construction supplies.}\\ \text{3} & \text{Deposited \$601.35 in the checking account.}\\ \text{6} & \text{Issued Check 505 for \$299.60 to CP Lumber for paint.}\\ \text{7} & \text{Issued Check 506 to Laverne Brothers for \$1,000.00 for }\\ \text{ } & \text{completing a painting job.}\\ \text{10} & \text{Deposited \$342.80 in the checking account.}\\ \text{10} & \text{Issued Check 507 to Union Utilities for the September }\\ \text{ } & \text{electricity bill of \$175.50.}\\ \end{array}$$

$ Calculate the balance brought forward amount on Check Stub 508.

Bank reconciliation adjustment a. Show the reconciling items in a horizontal model or write the adjusting journal entry (or entries) that should be prepared to reflect the reconciling items of the earlier exercise.

b. What is the amount of cash to be included in the August 31 balance sheet for the bank account reconciled in the previous exercise?

On August 14 Loretta Harper, owner of Peabody Cards and Gifts, deposited the following items in the checking account of the business. Cash: $784.29 Checks: Charles Ling, drawn on American Bank of Commerce, ABA No. 32-7091;$39.44 Keith Lopez, drawn on People’s Bank, ABA No. 84-268; $22.95 Marjorie Luke, drawn on Horizon Federal Savings and Loan, ABA No. 84-6249;$52.95 Mable Parker, drawn on Security National Bank, ABA No. 84-2242; $67.45 On August 15 Peabody received the July bill from Northeast Telephone for$214.80. On August 17 Peabody received an advertising bill from the Bayside News for $275.00. Using the forms provided in your working papers: 1. Complete a deposit slip. 2. Record the deposit on the check stub for Check 41. 3. Record the information for paying the telephone bill on Check Stub 41 and complete the check stub. Use August 16 as the date. 4. Prepare Check 41 to pay the telephone bill and sign your name as drawer. 5. Prepare the check stub and Check 42 to pay the bill for advertising. Use August 17 as the date and sign your name as drawer.

On October 4 the owner of Wilder ness Rentals deposited the following in the business checking account at First National Bank. The beginning balance in the account is $3,306.54 before these transactions. Cash: Currency,$374.00; Coins, $7.42 Checks: Bob Warner, drawn on Consumers Bank, ABA No. 63-706;$64.98 Joan Walkman, drawn on Mountain Bank, ABA No. 63-699; $349.81 Ernesto Garcia, drawn on Progressive Savings and Loan, ABA No. 63-710;$29.44. In your working papers: 1. Place a restrictive endorsement on each check. Use “Wilderness Rentals.” 2. Fill out a deposit slip. Use the ABA number to identify each check. 3. Record the deposit in the checkbook on Check Stub 651.

The general ledger account balances on May 31 for Outback Guide Service are:

$$\begin{array}{lll} \text{101} & \text{Cash in Bank} & \text{$\$ 2,834$}\\ \text{105} & \text{Accts. Rec. - Mary Johnson} & \text{384}\\ \text{125} & \text{Office Supplies} & \text{307}\\ \text{130} & \text{Office Equipment} & \text{$5,902$}\\ \text{135} & \text{Office Furniture} & \text{$2,804$}\\ \text{140} & \text{Computer Equipment} & \text{$3,295$}\\ \text{145} & \text{Hiking Equipment} & \text{922}\\ \text{150} & \text{Rafting Equipment} & \text{$8,351$}\\ \text{205} & \text{Accts. Pay. - Peak Equipment Inc.} & \text{$1,204$}\\ \text{301} & \text{Juanita Ortega, Capital} & \text{$20,419$}\\ \text{302} & \text{Juanita Ortega, Withdrawals} & \text{$1,800$}\\ \text{310} & \text{Income Summary} & \text{\_\_\_}\\ \text{401} & \text{Guide Service Revenue} & \text{$9,179$}\\ \text{501} & \text{Advertising Expense} & \text{795}\\ \text{505} & \text{Maintenance Expense} & \text{125}\\ \text{515} & \text{Rent Expense} & \text{$2,000$}\\ \text{525} & \text{Utilities Expense} & \text{$1,283$}\\ \end{array}$$

Prepare a work sheet for Outback Guide Service for the period ended May 31 in your working papers. Compute the total assets for Outback.

On July 7 Video Connection’s accounting supervisor discovered that a July 3 transaction had been recorded incorrectly. The transaction, involving the purchase of advertising in the local newspaper with a $300 check, was incorrectly journalized and posted to the Rent Expense account. In your working papers, record and post the correcting entry using the Memorandum as the source document.$

$$\begin{array}{ll} \text{VIDEO} & \text{ }\\ \text{Connection} & \text{ }\\ \text{TO:} & \text{Accounting Clerk}\\ \text{FROM:} & \text{Accounting Manager}\\ \text{DATE:} & \text{July $7,20-$}\\ \text{SUBJECT:} & \text{Correction of error}\\ \end{array}$$

$On July 3, we paid$300 for advertising in the Daily News Record that was incorrectly journalized and posted to the Rent Expense account. Please record the necessary entry to correct this error.

Explain the differences between cash, checks, and credit card sales. Write a persuasive paragraph describing the advantages of using a debit card over a credit card.

Use the following information to complete the check stub.

Date ____________________
Amount _________________
To ______________________
For _____________________

Total _______________
Deposits ____________
This Check __________
Other (+ or -) ________
Balance _____________