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Problem 7-14 (Algo) Bank reconciliation and adjusting entries [Appendix 7A] El Gato Painting Company maintains a...
Problem 7-14 (Algo) Bank reconciliation and adjusting entries [Appendix 7A]
El Gato Painting Company maintains a checking account at
American Bank. Bank statements are prepared at the end of each
month. The November 30, 2021, reconciliation of the bank balance is
as follows:
| Balance per bank, November 30 | $ | 3,361 | ||||
| Add: Deposits outstanding | 1,330 | |||||
| Less: Checks outstanding | ||||||
| #363 | $ | 136 | ||||
| #365 | 214 | |||||
| #380 | 69 | |||||
| #381 | 99 | |||||
| #382 | 220 | (738 | ) | |||
| Adjusted balance per bank, November 30 | $ | 3,953 | ||||
The company’s general ledger checking account showed the following
for December:
| Balance, December 1 | $ | 3,953 | ||
| Receipts | 43,950 | |||
| Disbursements | (43,153 | ) | ||
| Balance, December 31 | $ | 4,750 | ||
The December bank statement contained the following
information:
| Balance, December 1 | $ | 3,361 | |||
| Deposits | 44,300 | ||||
| Checks processed | (43,218 | ) | |||
| Service charges | (35 | ) | |||
| NSF checks | (570 | ) | |||
| Balance, December 31 | $ | 3,838 | |||
The checks that were processed by the bank in December include all
of the outstanding checks at the end of November except for check
#365. In addition, there are some December checks that had not been
processed by the bank by the end of the month. Also, you discover
that check #411 for $620 was correctly recorded by the bank but was
incorrectly recorded on the books as a $260 disbursement for
advertising expense. Included in the bank’s deposits is a $2,600
deposit incorrectly credited to the company’s account. The deposit
should have been posted to the credit of the Los Gatos Company. The
NSF checks have not been redeposited and the company will seek
payment from the customers involved.
Required:
1. Prepare a bank reconciliation for the El Gato
checking account at December 31, 2021.
2. Prepare any necessary adjusting journal entries
indicated.
Solutions
Expert Solution
1.
| El Gato Painting Company | ||
| Bank Reconciliation | ||
| at December 31, 2021 | ||
| Balance as per bank statement | $ 3,838 | |
| Add: Deposit in transit (43,950-44,300+2,600+1,330) | $ 3,580 | |
| Less: | ||
| Outstanding checks (43,153-43,218+738+360) | $ 1,033 | |
| Bank error in recording of deposit | $ 2,600 | |
| $ 3,633 | ||
| Adjusted bank balance | $ 3,785 | |
| Balance as per company book | $ 4,750 | |
| Less: | ||
| Service charges | $ 35 | |
| NSF Check | $ 570 | |
| Error in recording of check#411 ($620-260) | $ 360 | |
| $ 965 | ||
| Adjusted book balance | $ 3,785 | |
2.
| Date | Account title | Debit | Credit |
| Misc. expenses/ bank charges | $ 35 | ||
| Accounts receivable | $ 570 | ||
| Advertising expenses | $ 360 | ||
| Cash | $ 965 |
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ekkarill92 answered 1 year agoRelated Solutions
El Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at...
El Gato Painting Company maintains a checking account at
American Bank. Bank statements are prepared at the end of each
month. The November 30, 2021, reconciliation of the bank balance is
as follows: Balance per bank, November 30 $ 3,421 Add: Deposits
outstanding 1,390 Less: Checks outstanding #363 $ 142 #365 220 #380
75 #381 105 #382 280 (822 ) Adjusted balance per bank, November 30
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El Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at...
El Gato Painting Company maintains a checking account at
American Bank. Bank statements are prepared at the end of each
month. The November 30, 2021, reconciliation of the bank balance is
as follows:
Balance per bank, November 30
$
3,291
Add: Deposits outstanding
1,260
Less: Checks outstanding
#363
$
129
#365
207
#380
62
#381
92
#382
400
(890
)
Adjusted balance per bank, November 30
$
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The company’s general ledger checking account showed the following
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Balance,...
El Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at...
El Gato Painting Company maintains a checking account at
American Bank. Bank statements are prepared at the end of each
month. The November 30, 2021, reconciliation of the bank balance is
as follows:
Balance per bank, November 30
$
3,261
Add: Deposits outstanding
1,230
Less: Checks outstanding
#363
$
126
#365
204
#380
59
#381
89
#382
370
(848
)
Adjusted balance per bank, November 30
$
3,643
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$
3,371
Add: Deposits
outstanding
1,340
Less: Checks
outstanding
#363
$137
#365
215
#380
70
#381
100
#382
230
(752
)
Adjusted balance per
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$
3,959
The company’s general ledger
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$
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Add: Deposits
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Less: Checks
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$
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#365
217
#380
72
#381
102
#382
250
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Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at the...
Gato Painting Company maintains a checking account at American
Bank. Bank statements are prepared at the end of each month. The
November 30, 2021, reconciliation of the bank balance is as
follows:
Balance per
bank, November 30
$
3,431
Add: Deposits
outstanding
1,400
Less: Checks
outstanding
#363
$
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#365
221
#380
76
#381
106
#382
290
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Adjusted balance
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