Question

The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $146,035. The bank statement indicated a balance of $181,965 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

A.	Checks outstanding totaled $16,445.
B.	A deposit of $9,900, representing receipts of June 30, had been made too late to appear on the bank statement.
C.	The bank collected $31,800 on a $30,000 note, including interest of $1,800.
D.	A check for $2,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $200. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.
E.	A check drawn for $170 had been erroneously charged by the bank as $710.
F.	Bank service charges for June amounted to $75.

CHART OF ACCOUNTS
Pala Medical Co.
General Ledger
ASSETS 110 Cash 111 Petty Cash 120 Accounts Receivable 131 Notes Receivable 141 Merchandise Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 181 Land 191 Office Equipment 192 Accumulated Depreciation-Office Equipment 193 Store Equipment 194 Accumulated Depreciation-Store Equipment LIABILITIES 211 Accounts Payable-Skyline Supply Co. 221 Notes Payable 222 Interest Payable 231 Salaries Payable 241 Sales Tax Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 515 Credit Card Expense 516 Cash Short and Over 520 Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Insurance Expense 534 Office Supplies Expense 535 Rent Expense 536 Repairs Expense 537 Selling Expenses 538 Store Supplies Expense 561 Depreciation Expense-Office Equipment 562 Depreciation Expense-Store Equipment 590 Miscellaneous Expense 710 Interest Expense

1. Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Pala Medical Co.

Bank Reconciliation

June 30, 20Y1

1	Cash balance according to bank statement
2	Adjustments:
3
4
5
6
7
8
9	Cash balance according to company’s records
10	Adjustments:
11
12
13
14
15

Answer 1

Pala Medical Co.
Bank Reconciliation
June 30, 20Y1
Cash balance according to bank statement		$   181,965
Adjustments
Deposit of June 30 not recorded by bank	$       9,900
Bank error in charging check as $710 instead of $170	$          540
Outstanding checks	$ (16,445)
Total adjustments		$     (6,005)
Adjusted balance		$   175,960
Cash balance according to company's record		$   146,035
Adjustments
Error in recording check	$    (1,800)
Bank service charges	$          (75)
Proceeds of note collected by bank, including $1,800 interest	$    31,800
Total adjustments		$     29,925
Adjusted balance		$   175,960

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