Question

The cash account for American Medical Co. at April 30 indicated a balance of $14,740. The bank statement indicated a balance of $17,460 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

1. Checks outstanding totaled $6,290.
2. A deposit of $6,550, representing receipts of April 30, had been made too late to appear on the bank statement.
3. The bank collected $3,400 on a $3,230 note, including interest of $170.
4. 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.
5. A check drawn for $40 had been erroneously charged by the bank as $400.
6. Bank service charges for April amounted to $20.

Answer 1

American Medical Co.
Bank Reconciliation
April 30
Cash balance according to bank statement		$   17,460
Adjustments
Deposit of April 30 not recorded by bank	$    6,550
Bank error in charging check as $400 instead of $40	$        360
Outstanding checks	$ (6,290)
Total adjustments		$        620
Adjusted balance		$   18,080
Cash balance according to company's record		$   14,740
Adjustments
Error in recording check	$        (40)
Bank service charges	$        (20)
Proceeds of note collected by bank, including $170 interest	$    3,400
Total adjustments		$     3,340
Adjusted balance		$   18,080

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