Question

1. Bank Reconciliation and Entries

   The cash account for Stone Systems at July 31, 20Y5, indicated a balance of $17,750. The bank statement indicated a balance of $33,650 on July 31, 20Y5. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:

2. Checks outstanding totaled $17,865.
3. A deposit of $9,150, representing receipts of July 31, had been made too late to appear on the bank statement.

4. Required:

5. The bank had collected $6,095 on a note left for collection. The face of the note was $5,750.
6. A check for $390 returned with the statement had been incorrectly recorded by Stone Systems as $930. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account.
7. A check drawn for $1,810 had been incorrectly charged by the bank as $1,180.
8. Bank service charges for July amounted to $80.

9. 1. Prepare a bank reconciliation.

   Stone Systems
   Bank Reconciliation
   July 31, 20Y5
   Cash balance according to bank statement		$
   Add: Outstanding checks
   	$
   Total deductions
   Adjusted balance		$
   Cash balance according to company's records		$
   Adjustments:
   	$
   Total additions
   Adjusted balance		$

   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.

   20Y5 July 31
   July 31

   3. If a balance sheet were prepared for Stone Systems on July 31, 20Y5, what amount should be reported as cash?
   $

Answer 1

(1)

Cash balance according to bank statement		$33,650
Deposit of July 31, not recorded by bank		$9,150
Outstanding checks	$17,865
Bank error in charging check as $1180 instead of $1810	$630
Total deductions		$18,495
Adjusted balance		$ 24,305
Cash balance according to company's records		$17,750
Adjustments:
Proceeds of note collected by bank, including $345 interest	$6,095
Error in recording check	$540	$6,635
Total additions		$24,385
Deduct bank service charges		$80
Adjusted balance		$ 24,305

(2)

20Y5	July 31	Cash	$ 6,635
		Notes Receivable		$ 5,750
		Interest Revenue		$     345
		Accounts Payable-Holland Co.		$     540
	July 31	Miscellaneous Expense	$        80
		Cash		$        80

(3)If a balance sheet were prepared for Stone Systems on July 31, 20Y5, what amount should be reported as cash?
$24305