On May 31, 2001, Interactive Company had a cash balance per books of $5,681.50. The bank statement
Question:
On May 31, 2001, Interactive Company had a cash balance per books of
$5,681.50. The bank statement from Community Bank on that date showed a balance of
$7,784.60. A comparison of the statement with the cash account revealed the following facts:
1. The statement included a debit memo of $60 for the printing of additional company checks.
2. Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $846.15. The bank credited Interactive Company for the correct amount.
3. Outstanding checks at May 31 totaled $1,276.25, and deposits in transit were
$836.15.
4. On May 18 the company issued check No. 1181 for $685 to M. Helms, on account.
The check, which cleared the bank in May, was incorrectly journalized and posted by Interactive Company for $658.
5. A $3,000 note receivable was collected by the bank for Interactive Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.
6. Included with the cancelled checks was a check issued by Teller Company to P. Jonet for $600 that was incorrectly charged to Interactive Company by the bank.
7. On May 31 the bank statement showed an NSF charge of $700 for a check issued by W. Hoad, a customer, to Interactive Company on account.
Instructions
(a) Prepare the bank reconciliation as of May 31, 2001.
(b) Prepare the necessary adjusting entries at May 31, 2001.
Step by Step Answer:
Financial Accounting Tools For Business Decision Making
ISBN: 9780471347743
2nd Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso