Question

The bank statement for the checking account of Management Systems Inc. (MSI) showed a December 31, 2018, balance of $15,434.12. Information that might be useful in preparing a bank reconciliation is as follows: Outstanding checks were $1,401.45. The December 31, 2018, cash receipts of $615 were not deposited in the bank until January 2, 2019. One check written in payment of rent for $254 was correctly recorded by the bank but was recorded by MSI as a $269 disbursement. In accordance with prior authorization, the bank withdrew $530 directly from the checking account as payment on a mortgage note payable. The interest portion of that payment was $390. MSI has made no entry to record the automatic payment. Bank service charges of $22 were listed on the bank statement. A deposit of $915 was recorded by the bank on December 13, but it did not belong to MSI. The deposit should have been made to the checking account of MIS, Inc. The bank statement included a charge of $65 for an NSF check. The check was returned with the bank statement and the company will seek payment from the customer. MSI maintains a $280 petty cash fund that was appropriately reimbursed at the end of December. According to instructions from MSI on December 30, the bank withdrew $14,000 from the account and purchased U.S. Treasury bills for MSI. MSI recorded the transaction in its books on December 31 when it received notice from the bank. Half of the Treasury bills mature in two months and the other half in six months.

Required: 1. Prepare a bank reconciliation for the MSI checking account at December 31, 2018. You will have to compute the balance per books.

Prepare a bank reconciliation for the MSI checking account at December 31, 2018. You will have to compute the balance per books. (Round your answers to 2 decimal places.)

	Bank Reconciliation Balance per bank statement Add: Deduct: Corrected cash balance Balance per books Add: Deduct: Corrected cash balance

2. Prepare any necessary adjusting journal entries indicated.

Record transaction to correct error in recording cash disbursement for rent.

Note: Enter debits before credits.

	Event General Journal Debit Credit 1 Record credits to cash revealed by the bank reconciliation. Use the miscellaneous expense account to record the bank service charges. Note: Enter debits before credits. Event General Journal Debit Credit 2

3. What amount would MSI report as cash and cash equivalents in the current asset section of the December 31, 2018, balance sheet?

What amount would MSI report as cash and cash equivalents in the current asset section of the December 31, 2018, balance sheet? (Round your answer to 2 decimal places.)

What amount would MSI report as cash and cash equivalents in the current asset section of the December 31, 2018, balance sheet? (Round your answer to 2 decimal places.)

Answer 1

Balance per bank statement	15,434.12
Add:
Rent Payment	254.00
mortgage note payable	530.00
Bank service charges	22.00
NSF check	65.00
petty cash	280.00
Cash receipts	615.00
Less:
Outstanding checks	1,401.45
Rent Payment	269.00
deposit of Wrongly recorded	915.00
Corrected cash balance	14,614.67
Balance as per Books	14,614.67
Add:
Outstanding checks	1,401.45
Rent Payment	269.00
Deposit of Wrongly recorded	915.00
Less:
Rent Payment	254.00
mortgage note payable	530.00
Bank service charges	22.00
NSF check	65.00
petty cash	280.00
Cash receipts	615.00
	15,434.12
General Journal	Debit	Credit
Cash	15.00
To Rent		15
General Journal	Debit	Credit
Mortgage note payable	530.00
miscellaneous expense	22.00
NSF check Charges	65.00
Cash		617.00
Cash and cash equivalents:
Cash Balance as per books	14,614.67	14,012.67
Rent Correction	15.00
Mortgage note payable	(530.00)
miscellaneous expense	(22.00)
NSF check Charges	(65.00)
Treasury bills	14,000.00
Cash and cash equivalents:	28,012.67