Flip Company purchases 100% of the supplies on account from vendor, Flop Company. Flip owes...
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Accounting
Flip Company purchases 100% of the supplies on account from vendor, Flop Company. Flip owes Flop $1,653 for recent purchases. The accounting clerk at Flip prepares a check for Flop and mails it, recording the check as follows in the accounting records:
Accounts Payable - Flop (dr) $1,653
Cash (cr) $1,653
The bank paid the vendor $1,635 (which due to a transposition error is the amount the check was drawn for). Flip should include a reconciling item on the book side of the reconciliation report and in the company's journal entry for said item Flip will debit cash.
True
False
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