The Following Events Apply to Bowman's Cleaning Service for Year

question 52

Essay

The following events apply to Bowman's Cleaning Service for Year 1.Issued stock for $44,000 cashOn May 1, paid $27,000 for one year's rent in advancePurchased on account $4,500 of supplies to be used in the businessPerformed services of $68,400 and received cashAt December 31, adjusted the records for the expired rentAt December 31, an inventory of supplies showed that $660 of supplies were still unusedRequired:Record the events in general ledger accounts under an accounting equation. (Note: There is no need to provide appropriate account titles for the Retained Earnings amounts in the last column of the table.)

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Definitions:

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, creditors, or internal controls.

Required Reserve Ratio

The fraction of deposits that a bank is required by regulation to hold in reserve, not loaning them out, ensuring banks can meet their depositor's demands.

Required Reserve

The minimum amount of funds that a bank must hold in reserve against deposits made by customers, as mandated by central banking authorities.

Excess Reserves

The amount of reserves that a bank holds beyond the required minimum, which can potentially be lent out to create new money.