Question

The following information is available for the OLIVIA Company for the month of December
2019
1. On December 31, 2019 the balance in the company's Cash account has a balance of $16,297 .
2. The company's bank statement shows a balance December 31, 2019 of $19,522 .
3. Outstanding checks at December 31, 2019 total $ 2,877 .
4. A deposit placed in the bank's night depository on December 31, 2019 totaling $ 1,676 did not
appear on the bank statement.
5. Included with the bank statement was a debit memorandum in the amount of $ 34 for bank
service charges. It has not been recorded on the company's books.
6. Included with the bank statement was a credit memorandum for collection of a notes receivable for
$ 1,233 . It has not been recorded on the company’s books.
7. A cash sales on December 15, 2019 that totaled $ 929 was incorrectly journaled and posted
as $ 992 .
8. A cash sales on December 27, 2019 that totaled $ 483 was incorrectly journaled and posted
as $ 438 .
9. Check #145 was written and sent to a vendor for payment of a $ 908 invoice. The check was
written correctly by but was journaled and posted as $ 980 .
10. Check #155 was written and sent to a vendor for payment of a $ 490 invoice. The check was
written correctly by but was journaled and posted as $ 409 .
11. An inspection of the bank statement revealed a deposit in the amount of $ 852 of unknown
origin. Further investigation revealed that the bank had incorrectly deposited the money into
OLIVIA’s account. The bank was contacted regarding the error.

A. Prepare a bank reconciliation statement for OLIVIA Company for the month ended December 31,
2019

B. Prepare the general journal entries to bring the OLIVIA Company's book balance of cash into
conformity with the reconciled balance as of December 31, 2019.

Answer 1

Solution

Olivia Company

A. Bank reconciliation statement for the month ended December 31, 2019:

Notes –

1. The bank incorrectly deposited $852 to the company’s account. The same has to be deducted from the bank statement.

2. Error in recording cash sales made on Dec 15, 2019 – 929 – 992 = (63)

3. Error in recording cash sales made on Dec 27, 2019 483 – 438 = $45

4. Error in recording check #145, 980 – 908 = $72

5. Error in recording check # 155 490 – 409 = (81)

B. General journal entries –