In: Accounting
solve the follwing problem.
Bank reconciliation and entries
The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $146,035. The bank statement indicated a balance of $181,965 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 $16,445. |
B. | A deposit of $9,900, representing receipts of June 30, had been made too late to appear on the bank statement. |
C. | The bank collected $31,800 on a $30,000 note, including interest of $1,800. |
D. | A check for $2,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $200. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account. |
E. | A check drawn for $170 had been erroneously charged by the bank as $710. |
F. | Bank service charges for June amounted to $75. |
1. | Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. 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?
Amount DescriptionsAdjusted balanceBank error in charging check as $710 instead of $170Bank error in charging check as $170 instead of $710Bank service chargesCheck for $710 returned because of insufficient fundsDeposit of June 30, not recorded by bankError in recording checkError in recording June 30 depositOutstanding checksProceeds of note collected by bank, including $1,800 interestTotal adjustments 1. Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. 3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash? |
1.
Pala Medical Co | ||
Bank Reconciliation | ||
June 30, 20Y1 | ||
Balance as per bank | $ 181,965 | |
Add: | ||
Deposit of June 30, not recorded by bank | $ 9,900 | |
Bank error in charging check as 710 insteed of 170 | 540 | $ 10,440 |
Deduct: | ||
Outstanding checks | $ 16,445 | |
Bank error recording check | 200 | $ 16,645 |
Adjusted bank balance | $ 175,760 | |
Balance as per books | $ 146,035 | |
Add: Proceeds of note collected by bank, including $1,800 interest | $ 31,800 | |
Less: | ||
Bank service charges | $ 75 | |
Check returned because of insufficient fund | 2000 | $ 2,075 |
Asjusted book balance | $ 175,760 |
2. Journal entries
Cash | $ 31,800 | |
Notes receivable | $ 30,000 | |
Interest income | $ 1,800 | |
Accounts receivable | $ 2,000 | |
Cash | $ 2,000 | |
Miscllaneous expenses | $ 75 | |
Cash | $ 75 |
3. USD 175,760 will reported as cash balance.
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