Question

The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $93,115. The bank statement indicated a balance of $125,800 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

a.	Checks outstanding totaled $30,060.
b.	A deposit of $19,240, representing receipts of June 30, had been made too late to appear on the bank statement.
c.	The bank collected $24,075 on a $22,500 note, including interest of $1,575.
d.	A check for $1,800 returned with the statement had been incorrectly recorded by Pala Medical Co. as $180. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.
e.	A check drawn for $390 had been erroneously charged by the bank as $930.
f.	Bank service charges for June amounted to $50.

	Instructions
1.	Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Add:" & "Deduct:" will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
2.	Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles.
3.	If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?

Answer 1

1) Bank recon can be prepared 2 ways

2) Journal entries will be booked for those transactions which affect cash balance according to company's records

3) Balance to be reported in balance sheet = $115,520

Workings

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