Question

Bank Reconciliation and Entries The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $9,335. The bank statement indicated a balance of $10,710 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: Checks outstanding totaled $3,860. A deposit of $4,020, representing receipts of June 30, had been made too late to appear on the bank statement. The bank collected $2,090 on a $1,980 note, including interest of $110. A check for $550 returned with the statement had been incorrectly recorded by Pala Medical Co. as $500. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account. A check drawn for $50 had been erroneously charged by the bank as $500. Bank service charges for June amounted to $55. Required: 1. Prepare a bank reconciliation. Pala Medical Co. Bank Reconciliation June 30, 20Y1 Cash balance according to bank statement $ Adjustments: $ Total adjustments Adjusted balance $ Cash balance according to company's records $ Adjustments: $ Total adjustments Adjusted balance $ 2. Journalize the necessary entries

(a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank. a. 20Y1 June 30 b. June 30 3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash? $ PreviousNext

Answer 1

1	Pala Medical Co.
	Bank Reconciliation Statement
	June 30 20Y1
	balance as per bank statement	10710
	Adjustments:
	Add: Deposit in Transit	4020
	Add: BANK ERROR	450
	Less: Outstanding checks	-3860
	Adjusted Cash Balance	11320
	Cash balance as per books	9335
	Adjustments:
	Add: Note Collected by bank	1980
	Add: Interest on note collected	110
	Less: Error In writing check	-50
	Less: Bank collection fees	-55
	Adjusted Cash Balance	11320
2	Journal Entry
	110 Cash	1985
	211 Accounts Payable-Skyline Supply Co.	50
	590 Miscellanous Expense	55
	131 Note Receivable		1980
	610 Interest Revenue		110
	(being adjustment entry passed)
3	Cash to be reported in balance sheet: $11320