Hannah Company Needs to Make Adjusting Entries for Each of the Following

question 150

Essay

Hannah Company needs to make adjusting entries for each of the following reconciling items. Identify the account to be debited and the account to be credited in each case.
1. A check for $172 written to the company by J. Chandler was returned NSF.
2. The monthly service charge by the bank was $18.
3. The bank collected a $2000 note plus interest of $200 on the company's behalf. The company had not accrued the interest.

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Definitions:

Cost of Retained Earnings

The rate of return that shareholders expect on the earnings that a company keeps and reinvests in its operations.

Risk Premium

The extra return expected by an investor for holding a risky asset rather than a risk-free asset.

Flotation Costs

The costs incurred by a company in issuing new securities, including underwriting, legal, and registration fees.

Equity Capital

Funds raised by a company in exchange for shares of ownership in the company.