Question

Bank Reconciliation and Entries Sunshine Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of July 31 have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account. BANK RECONCILIATION FOR PRECEDING MONTH (DATED JUNE 30): Cash balance according to bank statement $9,422.80 Add deposit of June 30, not recorded by bank 780.80 $10,203.60 Deduct outstanding checks: No. 580 $310.10 No. 602 85.50 No. 612 92.50 No. 613 137.50 625.60 Adjusted balance $9,578.00 Cash balance according to company's records $9,605.70 Deduct bank service charges 27.70 Adjusted balance $9,578.00 CASH ACCOUNT: Balance as of July 1 $ 9,578.00 CASH RECEIPTS FOR MONTH OF JULY 6,465.42 DUPLICATE DEPOSIT TICKETS: Date and amount of each deposit in July: Date Amount Date Amount Date Amount July 2 $569.50 July 12 $580.70 July 23 $ 713.45 5 701.80 16 600.10 26 601.50 9 819.24 19 701.26 31 1,177.87 CHECKS WRITTEN: Number and amount of each check issued in July: Check No. Amount Check No. Amount Check No. Amount 614 $243.50 621 $309.50 628 $837.70 615 350.10 622 Void 629 329.90 616 279.90 623 Void 630 882.80 617 395.50 624 707.01 631 1,081.56 618 435.40 625 158.63 632 325.40 619 320.10 626 550.03 633 310.08 620 238.87 627 381.73 634 241.71 Total amount of checks issued in July $8,379.42 Click here to see JUNE BANK STATEMENT. Required: 1. Prepare a bank reconciliation as of July 31. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable. When required, enter amounts in dollars and cents. Sunshine Interiors Bank Reconciliation July 31, 20Y5 Cash balance according to bank statement $ $ Adjusted balance $ Cash balance according to company's records $ $ $ Adjusted balance $ 2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. When required, enter amounts in dollars and cents. For a compound transaction, if an amount box does not require an entry, leave it blank. a. 20Y5 July 31 b. July 31 3. What is the amount of Cash that should appear on the balance sheet as of July 31? $ 4. Assume that a canceled check for $180 has been incorrectly recorded by the bank as $1,800. Select how the error would be included in a bank reconciliation and how it should be corrected. Treatment To correct

Answer 1

Particulars	Amount
Balance in cash account	$9,578.00
Add: cash deposited in august	$6,465.42
Less: checks written	$8,379.42
Balance as per company’s records	$7,664.00

Therefore, the balance per company’s records is $7,664.00.

BANK RECONCILIATION:

Cash balance according to bank statement		$11,601.41
Add: Deposit of July 31, not recorded by bank	$1,177.87
		$12,779.28
Deduct outstanding checks:
No.613	$137.50
No.628	$837.70
No.633	$310.08	$1,285.28
Adjusted balance		$11,494
Cash balance according to company’s records		$7,664
Add: Proceeds of note collected by bank, including $160 in interest	$4,160
Error in recording July 23 deposit	$18
Error in recording check No.627	$63	$4,241
		$11,905
Deduct: Check returned because of insufficient funds	$375
Bank service charges	$36	$411
Adjusted balance		$11,494

Date	Account title and Explanation	PF No	Debit	Credit
	Cash		$4,241
	Accounts receivable			$4,160
	Accounts payable			$63
	Cash short and over			$18
Date	Accounts receivable		$375
	Miscellaneous expense		$36
	Cash			$411

3.

The adjusted balance of $11,494.00 from the bank reconciliation should be reported as cash on the July 31 balance sheet.

4.

Incorrectly recording a canceled check of $180 as $1,800 causes an error of $1,620 to the balance on the bank statement. The amount of $1,620 should be added to the bank statement balance on the bank reconciliation. The error should be corrected by providing the canceled check to bank and requesting the bank to correct the balance.