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In: Accounting

[The following information applies to the questions displayed below.] Oscar’s Red Carpet Store maintains a checking...

[The following information applies to the questions displayed below.]

Oscar’s Red Carpet Store maintains a checking account with Academy Bank. Oscar’s sells carpet each day but makes bank deposits only once per week. The following provides information from the company’s cash ledger for the month ending February 28, 2018.
  
Date Amount No. Date Amount
Deposits: 2/4 $ 2,700 Checks: 321 2/2 $ 4,700
2/11 2,300 322 2/8 400
2/18 3,200 323 2/12 2,500
2/25 4,100 324 2/19 2,200
Cash receipts: 2/26-2/28 1,600 325 2/27 200
326 2/28 700
$ 13,900 327 2/28 1,900
Balance on February 1 $ 6,800 $12,600
Receipts 13,900
Disbursements (12,600)
Balance on February 28 $ 8,100

Information from February's bank statement and company records reveals the following additional information:
  
a. The ending cash balance recorded in the bank statement is $13,145.
b. Cash receipts of $1,600 from 2/26-2/28 are outstanding.
c. Checks 325 and 327 are outstanding.
d. The deposit on 2/11 includes a customer's check for $200 that did not clear the bank (NSF check).
e. Check 323 was written for $2,800 for advertising in February. The bank properly recorded the check for this amount.
f. An automatic withdrawal for Oscar's February rent was made on February 4 for $1,100.
g. Oscar's checking account earns interest based on the average daily balance. The amount of interest earned for February is $20.
h. In January, one of Oscar's suppliers, Titanic Fabrics, borrowed $6,000 from Oscar. On February 24, Titanic paid $6,250 ($6,000 borrowed amount plus $250 interest) directly to Academy Bank in payment for January's borrowing.
i. Academy Bank charged service fees of $125 to Oscar’s for the month.
1.value:
10.00 pointsRequired information
Required:
1. Prepare a bank reconciliation for Oscar's checking account on February 28, 2018. (Amounts to be deducted should be indicated with a minus sign.)
  

ReferenceseBook & Resources
WorksheetDifficulty: 3 HardLearning Objective: 04-05 Reconcile a bank statement.
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2.value:
10.00 pointsRequired information
2. Record the necessary cash adjustments. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Total entries to the same account together when entering in the journal entry carousel.)
  

ReferenceseBook & Resources
General JournalDifficulty: 3 HardLearning Objective: 04-05 Reconcile a bank statement.
Ask your instructor a questionCheck my work

Solutions

Expert Solution

1
OSCAR'S RED CARPET STORE
Bank Reconciliation
February 28, 2018
Bank's Cash Balance Company's Cash Balance
Per Bank Statement 13145 Per general ledger 8100
Deposits outstanding 1600 Company error -300
Checks outstanding -2100 EFT for rent -1100
Interest on account 20
Interest on note 250
Note collected 6000
NSF check -200
Service fees -125
Bank balance per reconciliation 12645 Company balance per reconciliation 12645
2
Debit Credit
Cash 6270
       Notes Receivable 6000
       Interest Revenue 270 =20+250
Accounts Receivable 200
Advertising Expense 300
Rent Expense 1100
Service Charge Expense 125
          Cash 1725

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