The bank reconciliation made by Adam Company, a sole proprietorship, on March 31 showed a deposit in transit of \(\$ 1,300\) and two outstanding checks, No. 797 for \(\$ 550\) and No. 804 for \(\$ 690\). The reconciled cash balance on March 31 was \(\$ 12,020\).

The following bank statement is available for April 30:

A list of deposits made and checks written during April is shown below:

The Cash in Bank account balance on April 30 was \(\$ 13,991\). In reviewing checks returned by the bank, the accountant discovered that check No. 811 , written for \(\$ 541\) for delivery expense, was recorded in the cash disbursements journal as \(\$ 451\). The NSF check for \(\$ 500\) was that of customer R. Koppa, deposited in April. Interest for April added to the account by the bank was \(\$ 95\).

Required

a. Prepare a bank reconciliation for Adam Company at April 30.

b. Prepare the necessary journal entries to bring the Cash in Bank account into agreement with the reconciled cash balance on the bank reconciliation.

Transcribed Image Text:

TO Adam Company Fairbanks, AK Bank Statement April 30 FAIRBANKS NATIONAL BANK Date Deposits No. Date Charges Date Balance Mar. 31 $11,960 Apr. 1 $1,300 804 Apr. 2...... $ 690 Apr. 1 13,260 3 1,680 807 3. 730 2 12,570 7 1,250 808 7. 1,240 3 13,520 223288 13 1,020 809 7 838 7 12,692 18 840 810 16 1,040 13 13,171 990 811 13 541 16 12,131 27 1,340 813 27 640 18 12,471 30 1,160 814 23 600 23 12,861 30 95IN NSF 18 500 27 13,561 SC 30 40 30 14,776 Item Codes: EC: Error Correction SC: Service Charge IN: Interest Earned DM: Debit Memo CM: Credit Memo OD: Overdraft RT: Returned Item NSF: Non-sufficient Funds