Rocky Mountain 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.

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.2. Journalize the necessary entries. The accounts have not been closed.3. What is the amount of Cash that should appear on the balance sheet as of July 31?4. Assume that a canceled check for $125 has been incorrectly recorded by the bank as $1,250. Briefly explain how the error would be included in a bank reconciliation and how it should becorrected.

Transcribed Image Text:

BANK RECONCILIATION FOR PRECEDING MONTH (DATED JUNE 30): Cash balance according to bank statement. Add deposit of June 30, not recorded by bank $ 9,422.80 780.80 $10,203.60 Deduct outstanding checks: No. 580 $310.10 No. 602 No. 612 No. 613 85.50 92.50 137.50 625.60 $ 9,578.00 Adjusted balance $ 9,605.70 Cash balance according to company's records Deduct service charges 27.70 $ 9,578.00 Adjusted balance. CASH ACCOUNT: $9,578.00 Balance as of July 1 CHECKS WRITTEN: Number and amount of each check issued in July: Check No. Amount Check No. Amount Check No. Amount $ 837.70 329.90 882.80 $243.50 350.10 279.90 621 622 623 628 629 630 631 632 614 $309.50 615 616 Void Void 617 395.50 624 707.01 1,081.56 62.40 310.08 503.30 618 435.40 625 626 627 158.63 619 320.10 550.03 633 328.87 620 318.73 634 Total amount of checks issued in July $8,405.01