Question

chapter 7 lab -04

Bank Reconciliation and Entries

The cash account for Collegiate Sports Co. on November 1, 20Y9, indicated a balance of $81,145. During November, the total cash deposited was $293,150, and checks written totaled $307,360. The bank statement indicated a balance of $112,675 on November 30, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

Checks outstanding totaled $41,840.

A deposit of $12,200, representing receipts of November 30, had been made too late to appear on the bank statement.

A check for $7,250 had been incorrectly charged by the bank as $2,750.

A check for $760 returned with the statement had been recorded by Collegiate Sports Co. as $7,600. The check was for the payment of an obligation to Ramirez Co. on account.

The bank had collected for Collegiate Sports Co. $7,385 on a note left for collection. The face of the note was $7,000.

Bank service charges for November amounted to $125.

A check for $2,500 from Hallen Academy was returned by the bank because of insufficient funds.

Required:

1. Prepare a bank reconciliation as of November 30, 20Y9.

Collegiate Sports Co.

Bank Reconciliation

November 30, 20Y9 Cash balance according to bank statement $ Adjustments: Deposit of November 30, not recorded by bank $ Bank error in charging check as $2,750 instead of $7,250 Outstanding checks Total adjustments Adjusted balance $ Cash balance according to company's records $ Adjustments: Proceeds of note collected by bank, including $385 interest $ Error in recording check as $7,600 instead of $760 Check returned because of insufficient funds Bank service charges 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 entry, if an amount box does not require an entry, leave it blank. 20Y9 Nov. 30 Cash Notes Receivable Interest Revenue Accounts Payable-Ramirez Co. Nov. 30 Accounts Receivable-Hallen Academy Miscellaneous Expense Cash

3. If a balance sheet were prepared for Collegiate Sports Co. on November 30, 20Y9, what amount should be reported as cash?
$____________________

Answer 1

	Bank reconciliation
	Bank balance		112675
Add	Deposit in transit		12200
Less	Outstanding checks	41840
	Incorrectly charged by bank (7250-2750)	4500	46340
	Adjusted bank balance		78535
	Cash balance		66935
Add	Directly deposited in bank(notes + interest)	7385
	Error in recording (7600-760)	6840	14225
Less	Service fees	125
	NSF check	2500
			2625
	Adjusted cash balance		78535
	Journal entries
1	Cash	14225
	Notes receivable		7000
	Interest revenue		385
	Accounts payable ramirez co.		6840
2	Accounts receivable hallen academy	2500
	Misc. Expense	125
	Cash		2625

Cash should be reported in the balance sheet as $78535