The Bank Statement for Richards Company Included a Debit Memo

question 47

Essay

The bank statement for Richards Company included a debit memo for a bank service charge of $58.
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 Richards should make to recognize the effects of the service charge.

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Definitions:

Gasoline

A combustible fluid obtained from petroleum, mainly utilized as a fuel for internal combustion engines.

Supply Decrease

A reduction in the quantity of a good that producers are willing or able to sell, often due to factors such as increased production costs, taxation, or supply chain disruptions.

Excess Supply

A situation in a market where the quantity of a good or service available exceeds the quantity demanded at the current price, leading to surplus.

Scarcity

A basic issue in economics where human desires appear unlimited, but the world has finite resources.