Question

The cash account for Collegiate Sports Co. on November 1, 20Y9, indicated a balance of $12,980. During November, the total cash deposited was $71,170 and checks written totaled $66,080. The bank statement indicated a balance of $24,130 on November 30, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

1. Checks outstanding totaled $10,750.
2. A deposit of $8,750, representing receipts of November 30, had been made too late to appear on the bank statement.
3. A check for $850 had been incorrectly charged by the bank as $580.
4. A check for $520 returned with the statement had been recorded by Collegiate Sports Co. as $250. The check was for the payment of an obligation to Ramirez Co. on account.
5. The bank had collected for Collegiate Sports Co. $4,630 on a note left for collection. The face of the note was $4,270.
6. Bank service charges for November amounted to $40.
7. A check for $1,070 from Hallen Academy was returned by the bank because of insufficient funds.

Instructions:

1. Prepare a bank reconciliation as of November 30, 20Y9.

Collegiate Sports Co.
Bank Reconciliation
November 30, 20Y9
Cash balance according to bank statement		$
Add: Deposit in transit on November 30
Deduct: Outstanding checks	$
Deduct: Bank error in charging check as $580 instead of $850
Total deductions
Adjusted balance		$
Cash balance according to company's records		$
Add: Note collected by bank, including $360 interest	$
Add: Error in recording check as $250 instead of $520
Total additions
Deduct: Check returned because of insufficient funds	$
Deduct: Bank service charges
Total deductions
Adjusted balance		$

Feedback

1. Set up two sections: one for the company cash account section and the other for the bank balance section. Determine the effect of the data on each section. Recall that when you are finished, the adjusted balances in the bank and company sections of the reconciliation must be equal. If not, an item has been overlooked or treated in error.
Recall that the company's cash account balance is updated for any items in the company section of the bank reconciliation.

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. If an amount box does not require an entry, leave it blank.

a. 20Y9 Nov. 30
b. Nov. 30

Feedback

2. Keep in mind that the company needs to journalize any adjusting items in the company section of the bank reconciliation, because these have not been previously recorded by the company. Debit memo items like bank service charges decrease Cash. Items that come from credit memos like collections of notes or interest by the bank increase cash. If the company made an error that overstates or understates cash in the company section, the journal adjustment would decrease Cash or increase Cash, respectively.

3. If a balance sheet were prepared for Collegiate Sports Co. on November 30, 20Y9, what amount should be reported as cash?
$

Answer 1

Collegiate Sports Co.
Bank Reconciliation
November 30, 20Y9
Cash balance according to bank statement		24130
Add: Deposit in transit on November 30		8750
Deduct: Outstanding checks	-10750
Deduct: Bank error in charging check as $580 instead of $850	-270
Total deductions		-11020
Adjusted balance		21860
	Cash balance according to company's records		18070	( 12980 + 71170 - 66080 )
Add: Note collected by bank, including $360 interest	4630
Add: Error in recording check as $250 instead of $520	270
Total additions		4900
Deduct: Check returned because of insufficient funds	-1070
Deduct: Bank service charges	-40
Total deductions		-1110
Adjusted balance		21860
Journal entries
Cash	4630
Notes receivable		4270
Interest revenue		360
Cash	270
Accounts payable		270
Bank service charges	40
Cash		40
Accounts receivable	1070
Cash		1070
3- $ 21860