Bank Reconciliation and Entries Sunshine 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, 2040, 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. CASH ACCOUNT: Balance as of July 1 $9,578.00 CASH RECEIPTS FOR MONTH OF JULY 6,465.42 DUPLICATE DEPOSIT TICKETS: Date and amount of each deposit in July: Date Amount Date Amount Date Amount July 2 $569.50 July 12 $580.70 July 23 $713.45 5 701.80 16 600.10 26 601.50 9 819.24 19 701.26 31 1,177.87 CHECKS WRITTEN: Number and amount of each check issued in July: Check No. Amount Check No. Amount Check No. Amount 614 $243.50 621 $309.50 628 $837.70 615 350.10 622 Void 629 329.90 616 279.90 623 Void 630 882.80 617 395.50 624 707.01 631 1,081.56 618 435.40 625 158.63 632 325.40 619 320.10 626 550.03 633 310.08 620 238.87 627 371.73 634 241.71 Total amount of checks issued in July $8,369.42 BANK RECONCILIATION FOR PRECEDING MONTH: Sunshine Interiors Bank Reconciliation June 30, 20YO $9,422.70 $780.80 Cash balance according to bank statement Add: Deposit of June 30 not recorded by bank Deduct: Outstanding Check No. 580 Outstanding Check No. 602 Outstanding Check No. 612 ($310.10) (85.50) (92.50) (137.40) Outstanding Check No. 613 Total deductions (625.50) Total deductions (625.50) Adjusted balance $9,578.00 Cash balance according to company's records $9,605.70 Deduct: Bank service charges (27.70) Adjusted balance $9,578.00 JULY BANK STATEMENT: MEMBER FDIC PAGE 1 AMERICAN NATIONAL BANK OF DETROIT ACCOUNT NUMBER FROM 7/01/20YO TO 7/31/20YO DETROIT, MI 48201-2500 (313) 933-8547 BALANCE 9,422.70 9 DEPOSITS 6,086.35 20 WITHDRAWALS 7,655.74 SUNSHINE INTERIORS 4 OTHER DEBITS AND CREDITS 3,754.00CR NEW BALANCE 11,607.31 CHECKS AND OTHER DEBITS DEPOSITS DATE BALANCE No. 580 310.10 No. 612 92.50 780.80 07/01 9,800.90 No. 602 85.50 No. 614 243.50 569.50 07/03 10,041.40 No. 615 350.10 No. 616 279.90 701.80 07/06 10,113.20 No. 617 395.50 No. 618 435.40 819.24 07/11 10,101.54 No. 619 320.10 No. 620 238.87 580.70 07/13 10,123.27 No. 621 309.50 No. 624 707.01 MS 4,000.00 07/14 13,106.76 No. 625 158.63 No. 626 550.03 MS 160.00 07/14 12,558.10 No. 627 317.73 No. 629 329.90 600.10 07/17 12,510.57 No. 630 882.80 No. 631 1,081.56 NSF 370.00 07/20 10,176.21 No. 632 325.40 No. 634 241.71 701.26 07/21 10,310.36 731.45 07/24 11,041.81 601.50 07/28 11,643.31 SC 36.00 07/31 11,607.31 EC ERROR CORRECTION OD OVERDRAFT MS MISCELLANEOUS PS PAYMENT STOPPED NSF -- NOT SUFFICIENT FUNDS SC SERVICE CHARGE THE RECONCILEMENT OF THIS STATEMENT WITH YOUR RECORDS IS ESSENTIAL. ANY ERROR OR EXCEPTION SHOULD BE REPORTED IMMEDIATELY. Required: 1. Prepare a bank reconciliation as of July 31, 2040. 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. When required, enter amounts in dollars and cents. Sunshine Interiors Bank Reconciliation July 31, 20YO Cash balance according to bank statement Add: Deposit in transit on July 31 1.177.87 Deduct: Outstanding Check no. 613 Deduct: Outstanding Check No. 628 110 Deduct: Outstanding Check No. 633 Total deductions Adjusted balance Cash balance according to company's records Add: Note collected by bank, including $160.00 interest Qid IO 1 Add: Error in recording July 23 deposit Add: Error in recording Check No. 627 Total additions Deduct: Check returned because of insufficient funds Deduct: Check returned because of insufficient funds Deduct: Bank service charges Total deductions Adjusted balance Feedback Check My Work Set up two sections: one for the bank balance and the other for the company cash account. Determine the effect of the data on each section. Recall that when you are finished, the adjusted balances in the bank and company sections of the reconciliation must be equal. If not, an item has been overlooked or treated in error. Recall that the company's cash account balance is updated for any items in the company section of the bank reconciliation. 2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. When required, enter amounts in dollars and cents. If an amount box does not require an entry, leave it blank. a. 20Y0 July 31 Cash Notes Receivable Interest Revenue 11111 110 Sales Accounts Payable b. July 31 Accounts Receivable Miscellaneous Expense 110 110 Cash Feedback Check My Work Keep in mind that the company needs to journalize any adjusting items in the company section of the bank reconciliation, because these have not been previously recorded by the company. Debit memo items like bank service charges decrease Cash. Items that come from credit memos like collections of notes or interest by the bank increase cash. If the company made an error that overstates or understates cash in the company section, the journal adjustment would decrease Cash or increase Cash, respectively. 3. What is the amount of cash that should appear on the balance sheet as of July 31, 20YO? 4. Assume that a canceled check for $180 has been incorrectly recorded by the bank as $1,800. Select how the error would be included in a bank reconciliation and how it should be corrected. Treatment Addition to cash per bank statement To correct Request that the bank correct the error Feedback Check My Work Recall that when you are finished, the adjusted balances in the bank and company sections of the reconciliation must be equal. If not, an item has been overlooked or treated in error. Recall that the company's cash account balance is updated for any items in the company section of the bank reconciliation