The Bank Statement for Farmer Co

question 98

Essay

The bank statement for Farmer Co. indicates a balance of $7,735.00 on June 30. After the journal entries for June had been posted, the cash account had a balance of $4,098.00. Prepare a bank reconciliation on the basis of the following reconciling items:
(a)Cash sales of $742 had been erroneously recorded in the cash receipts journal as $724.(b)Deposits in transit not recorded by bank, $425.(c)Bank debit memo for service charges, $35.(d)Bank credit memo for note collected by bank, $2,475 including $75 interest.(e)Bank debit memo for $256 NSF (not sufficient funds) check from Janice Smith, a customer.(f)Checks outstanding, $1,860.

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Definitions:

Direct Labor

The labor costs associated with workers who are directly involved in the production of goods or services.

Indirect Labor

The wages paid to employees who are not directly involved in the production of goods, such as supervisors and maintenance workers.

Product Cost

The total expense incurred in creating a product, including raw materials, labor, and overhead costs.

Period Cost

Expenses that are incurred to support business operations during a particular period, but are not directly tied to the production of goods or services.