Question

Bank Reconciliation and Entries

The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $10,910. The bank statement indicated a balance of $12,510 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

1. Checks outstanding totaled $4,500.
2. A deposit of $4,690, representing receipts of June 30, had been made too late to appear on the bank statement.
3. The bank collected $2,440 on a $2,310 note, including interest of $130.
4. 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.
5. A check drawn for $60 had been erroneously charged by the bank as $600.
6. Bank service charges for June amounted to $60.

Required:

1. Prepare a bank reconciliation.

Pala Medical Co.
Bank Reconciliation
June 30, 20Y1
Cash balance according to bank statement		$fill in the blank 193a36063fb6fab_1
Adjustments:
	$fill in the blank 193a36063fb6fab_3
	fill in the blank 193a36063fb6fab_5
	fill in the blank 193a36063fb6fab_7
Total adjustments		fill in the blank 193a36063fb6fab_8
Adjusted balance		$fill in the blank 193a36063fb6fab_9
Cash balance according to company's records		$fill in the blank 193a36063fb6fab_10
Adjustments:
	$fill in the blank 193a36063fb6fab_12
	fill in the blank 193a36063fb6fab_14
	fill in the blank 193a36063fb6fab_16
Total adjustments		fill in the blank 193a36063fb6fab_17
Adjusted balance		$fill in the blank 193a36063fb6fab_18

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		fill in the blank 343f27012013051_2	fill in the blank 343f27012013051_3
		fill in the blank 343f27012013051_5	fill in the blank 343f27012013051_6
		fill in the blank 343f27012013051_8	fill in the blank 343f27012013051_9
b. June 30		fill in the blank 343f27012013051_11	fill in the blank 343f27012013051_12
		fill in the blank 343f27012013051_14	fill in the blank 343f27012013051_15
		fill in the blank 343f27012013051_17	fill in the blank 343f27012013051_18

3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?
$fill in the blank c4639bfdbffa008_1

Answer 1

	Pala Medical Co
	Bank Reconciliation Statement
	June 30, 20Y1
	Unadjusted bank balance		12,510.00
	Add: Deposit in Transit		4,690.00
	Add: error by bank		540.00
			17,740.00
	Less: Outstanding checks		4,500.00
	Adjusted bank Balance		13,240.00
	Unadjusted cash balance		10,910.00
	Add: Note Collected		2,310.00
	Add: Interest on note		130.00
			13,350.00
	Less:
	Error in check	50.00
	Bank Service Charge	60.00
			110.00
	Adjusted Cash Balance		13,240.00
	Adjusting Journal Entry
Date	Accounts Name and Explanation	Debit	Credit
Jun-30	Cash	2,440.00
	Note Receivable		2310
	Interest Revenue		130.00
	(to record increase in cash)
Jun-30	Accounts Payable	50.00
	Bank Charges	60.00
	CASH		110.00
	(To record DECREASE IN CASH)