In: Accounting
The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $9,335. The bank statement indicated a balance of $10,710 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: Checks outstanding totaled $3,860. A deposit of $4,020, representing receipts of June 30, had been made too late to appear on the bank statement. The bank collected $2,090 on a $1,980 note, including interest of $110. A check for $550 returned with the statement had been incorrectly recorded by Pala Medical Co. as $500. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account. A check drawn for $50 had been erroneously charged by the bank as $500. Bank service charges for June amounted to $55. Required: 1. Prepare a bank reconciliation. Pala Medical Co. Bank Reconciliation June 30, 20Y1 Cash balance according to bank statement $ Adjustments: $ Total adjustments Adjusted balance $ Cash balance according to company's records $ Adjustments: $ Total adjustments Adjusted balance $ 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 b. June 30 3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash? $ PreviousNext
Answer-
Pala Medical Co. | ||
Bank Reconciliation | ||
June 30, 20Y1 | ||
Cash balance according to bank statement | $10,710 | |
Adjustments: | ||
Deposit of June 30, not recorded by bank | $4,020 | |
Outstanding checks | -$3,860 | |
Bank error in charging check as $50 instead of $500 | 450 | |
Total Adjustment | $610 | |
Adjusted cash balance according to bank statement | $11,320 | |
Cash balance according to company’s records | $9,335 | |
Adjustments: | ||
Proceeds of note collected by bank, including $110 interest | $2,090 | |
Error in recording check | -$50 | |
Bank service charges | -$55 | $1,985 |
$11,320 |
2) Preparing the Journal Entries:
Event | General Journal | Debit | Credit |
a) June 30 | Cash | $2,090 | |
Notes Receivable | $1,980 | ||
Interest Revenue | $110 | ||
b) June 30 | Accounts Payable- Skyline Supply Co. | $50 | |
Bank service charges | $55 | ||
Cash | $105 |
3-If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1,
amount that should be reported as cash $11,320
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