Question

Bank Reconciliation and Entries

Sunshine Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of July 31 have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account.

BANK RECONCILIATION FOR PRECEDING MONTH (DATED JUNE 30):
Cash balance according to bank statement	$9,422.80
Add deposit of June 30, not recorded by bank	780.80
	$10,203.60

Deduct outstanding checks:
No. 580	$310.10
No. 602	85.50
No. 612	92.50
No. 613	137.50		625.60
Adjusted balance			$9,578.00
Cash balance according to company's records			$9,605.70
Deduct bank service charges			27.70
Adjusted balance			$9,578.00
CASH ACCOUNT:
Balance as of July 1			$ 9,578.00
CASH RECEIPTS FOR MONTH OF JULY			6,465.42

DUPLICATE DEPOSIT TICKETS:
Date and amount of each deposit in July:
Date		Amount		Date		Amount		Date		Amount
July 2		$569.50		July 12		$580.70		July 23		$ 713.45
5		701.80		16		600.10		26		601.50
9		819.24		19		701.26		31		1,177.87

CHECKS WRITTEN:
Number and amount of each check issued in July:
Check No.		Amount		Check No.		Amount		Check No.		Amount
614		$243.50		621		$309.50		628		$837.70
615		350.10		622		Void		629		329.90
616		279.90		623		Void		630		882.80
617		395.50		624		707.01		631		1,081.56
618		435.40		625		158.63		632		325.40
619		320.10		626		550.03		633		310.08
620		238.87		627		381.73		634		241.71
Total amount of checks issued in July										$8,379.42

Click here to see JUNE BANK STATEMENT.

Required:

1. Prepare a bank reconciliation as of July 31. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable. When required, enter amounts in dollars and cents.

Sunshine Interiors
Bank Reconciliation
July 31, 20Y5
Cash balance according to bank statement		$
	$
Adjusted balance		$
Cash balance according to company's records		$
	$
	$
Adjusted balance		$

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. When required, enter amounts in dollars and cents. For a compound transaction, if an amount box does not require an entry, leave it blank.

Answer 1

1. Prepare a bank reconciliation as of July 31. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable. When required, enter amounts in dollars and cents.
Sunshine Interiors
Bank Reconciliation
July 31, 20Y5
Cash balance according to bank statement		$11,601.41
Add deposit of July 31, not recorded by bank		$1,177.87
		$12,779.28
Deduct outstanding checks:
# 613	$137.50
# 628	$837.70
# 633	$310.08	$1,285.28
Adjusted balance		$11,494.00
Cash balance according to company's records		$7,664.00
Add proceeds of note collected by bank
Principal	$4,000.00
Interest	$160.00
Add error in recording July 23 deposit	$18.00
Add error in recording Check No. 627	$63.00	$4,241.00
		$11,905.00
Deduct: Check returned because of insufficient funds	$375.00
Service charges	$36.00	$411.00
Adjusted balance		$11,494.00
*
Balance per cash in bank account, July 1	$9,578.00
Add July receipts	$6,465.42
Deduct July disbursements	-$8,379.42
Balance per cash in bank account, July 31	$7,664.00
2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. When required, enter amounts in dollars and cents. For a compound transaction, if an amount box does not require an entry, leave it blank.
a. 20Y5 July 31	Debit	Credit
Cash	$4,241.00
Notes Receivables		$4,000.00
Interest Revenue		$160.00
Sales		$18.00
Accounts Payable		$63.00
b. July 31
Accounts Receivable	$375.00
Miscellaneous Expense	$36.00
Cash		$411.00