Question
Bank Reconciliation and Entries The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $13,360. The bank statement indicated a
Bank Reconciliation and Entries
The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $13,360. The bank statement indicated a balance of $15,350 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:
- Checks outstanding totaled $5,530.
- A deposit of $5,760, representing receipts of June 30, had been made too late to appear on the bank statement.
- The bank collected $2,990 on a $2,840 note, including interest of $150.
- A check for $880 returned with the statement had been incorrectly recorded by Pala Medical Co. as $800. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.
- A check drawn for $70 had been erroneously charged by the bank as $700.
- Bank service charges for June amounted to $60.
Required:
1. Prepare a bank reconciliation.
Pala Medical Co. | ||
Bank Reconciliation | ||
June 30, 20Y1 | ||
Cash balance according to bank statement | $ | |
Adjustments: | ||
$ | ||
Total adjustments | ||
Adjusted balance | $ | |
Cash balance according to company's records | $ | |
Adjustments: | ||
$ | ||
Total adjustments | ||
Adjusted balance | $ |
2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank.
a. 20Y1 June 30 | |||
b. June 30 | |||
3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?
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