The Bank Statement for Raymond Company Included a Debit Memo

question 109

Essay

The bank statement for Raymond Company included a debit memo for a bank service charge of $50.
Required: a)Show the effects of recognizing the bank service charge on the financial statements by recording appropriate amounts in the financial statements model provided.Include dollar amounts of increases and decreases;for cash flow,indicate whether it is an operating activity,investing activity,or financing activity.
b)Is the recognition of the bank service charge an asset source,use,or exchange transaction?
c)Prepare the journal entry that Raymond should make to recognize the effects of the service charge.

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Definitions:

Interest Rate

The obligation, denoted as a percentage of the principal, incurred by borrowers for asset access from lenders.

Government Budget Deficit

The financial situation in which a government's expenditures exceed its revenues.

Loanable Funds

The resources available for borrowing, determined by the market for loans where savers supply funds and borrowers demand them.

Interest Rate

The cost of borrowing money or the return for investing money, expressed as a percentage of the amount borrowed or invested.