Question

Bank Reconciliation and Entries

The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $9,595. The bank statement indicated a balance of $11,240 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 $4,050.
2. A deposit of $4,220, representing receipts of June 30, had been made too late to appear on the bank statement.
3. The bank collected $2,190 on a $2,080 note, including interest of $110.
4. A check for $660 returned with the statement had been incorrectly recorded by Pala Medical Co. as $600. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.
5. A check drawn for $30 had been erroneously charged by the bank as $300.
6. Bank service charges for June amounted to $45.

Required:

1. Prepare a bank reconciliation.

Pala Medical Co.
Bank Reconciliation
June 30, 20Y1
Cash balance according to bank statement		$
Adjustments:
Deposit of June 30, not recorded by bank	$
Bank error in charging check as $300 instead of $30
Outstanding checks
Total adjustments
Adjusted balance		$
Cash balance according to company's records		$
Adjustments:
Proceeds of note collected by bank, including $110 interest	$
Bank error in charging check as $300 instead of $30
Bank service charges
Total adjustments
Adjusted balance		$

Feedback

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	Cash
	Notes Receivable
	Interest Revenue
b. June 30	Accounts Payable-Skyline Supply Co.
	Miscellaneous Expense
	Petty Cash

Feedback

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

Answer 1