Reference no: EM132493747

Problem 1 - Preparing a bank reconciliation

Evan Stephens operates a bowling alley. He has just received the monthly bank statement at April 30 from City National Bank, and the statement shows an ending balance of $585. Listed on the statement are an EFT rent collection of $330, a service charge of $8, two NSF checks totaling $135, and a $10 charge for printed checks. In reviewing his cash records, Stephens identifies outstanding checks totaling $622 and an April 30 deposit in transit of $1,898. During April, he recorded a $280 check for the salary of a part-time employee as $28. Stephens's Cash account shows an April 30 cash balance of $1,936. How much cash does Stephens actually have at April 30?

Problem 2 - Making journal entries from a bank reconciliation

Use the data from problem 1 to make the journal entries that Stephens should record on April 30 to update his Cash account. Include an explanation for each entry.

Problem 3 - Preparing a cash budget

Chad Communications, Inc., is preparing its cash budget for 20X7. Chad ended 20X6 with cash of $82 million, and managers need to keep a cash balance of at least $86 million for operations. Collections from customers are expected to total $11,308 million during 20X7, and payments for the cost of services and products should reach $6,165 million. Operating expense payments are budgeted at $2,543 million.

During 20X7, Chad expects to invest $1,816 million in new equipment and sell older assets for $116 million. Debt payments scheduled for 20X7 will total $604 million. The company forecasts net income of $895 million for 20X7 and plans to pay dividends of $33 million.

Prepare Chad Communications' cash budget for 20X7. Will the budgeted level of cash receipts leave Chad with the desired ending cash balance of $86 million, or will the company need additional financing? If so, how much?