Question

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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.

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Answer 1

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