Question

Bank Reconciliation and Entries The cash account for American Medical Co. at April 30 indicated a balance of $11,335. The bank statement indicated a balance of $13,070 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: Checks outstanding totaled $4,710. A deposit of $4,900, representing receipts of April 30, had been made too late to appear on the bank statement. The bank collected $2,550 on a $2,420 note, including interest of $130. A check for $440 returned with the statement had been incorrectly recorded by American Medical Co. as $400. The check was for the payment of an obligation to Targhee Supply Co. for a purchase on account. A check drawn for $60 had been erroneously charged by the bank as $600. Bank service charges for April amounted to $45. Required: 1. Prepare a bank reconciliation. American Medical Co. Bank Reconciliation April 30 Cash balance according to bank statement $ Add deposit of April 30, not recorded by bank $ Adjusted balance $ Cash balance according to company's records $ $ 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. April 30 Cash Notes Receivable Interest Revenue b. April 30 Accounts Payable-Targhee Supply Co. Miscellaneous Expense Cash 3. If a balance sheet is prepared for American Medical Co. on April 30, what amount should be reported as cash $

Answer 1

1)	A,erican Medical Co.
	Bank Reconciliation
	Apr-30
	Bank Statement Balance		13,070	Book Balance		11,335
	Add:			Add:
	Deposit in Transit	4,900		Note Collected	2,420
	Error in check for purchase	540		Interest Received	130
	Deduct:			Deduct:
	Outstanding Checks	4,710		Bank Charges	45
				Error in check returned	40
	Adjusted Bank Balance		13,800	Adjusted Book Balance		13,800
2)	Journal Entries
	General Journal	Debit	Credit
a)	Cash	2,550
	Interest Revenue		130
	Note Receivable		2,420
	(To record interest revenue and note received)
b)	Bank Charges	45
	Accounts recievable	40
	Cash		85
	(To record cash decreased)
3)	Amount should be reported as cash $	13,800