Question
Bank Reconciliation and Entries The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $9,595. The bank statement indicated a
Bank Reconciliation and Entries
The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $9,595. The bank statement indicated a balance of $11,240 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 $4,050.
- A deposit of $4,220, representing receipts of June 30, had been made too late to appear on the bank statement.
- The bank collected $2,190 on a $2,080 note, including interest of $110.
- A check for $660 returned with the statement had been incorrectly recorded by Pala Medical Co. as $600. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.
- A check drawn for $30 had been erroneously charged by the bank as $300.
- Bank service charges for June amounted to $45.
Required:
1. Prepare a bank reconciliation.
Pala Medical Co. | ||
Bank Reconciliation | ||
June 30, 20Y1 | ||
Cash balance according to bank statement | $ | |
Adjustments: | ||
Deposit of June 30, not recorded by bank | $ | |
Bank error in charging check as $300 instead of $30 | ||
Outstanding checks | ||
Total adjustments | ||
Adjusted balance | $ | |
Cash balance according to company's records | $ | |
Adjustments: | ||
Proceeds of note collected by bank, including $110 interest | $ | |
Bank error in charging check as $300 instead of $30 | ||
Bank service charges | ||
Total adjustments | ||
Adjusted balance | $ |
Feedback
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 | Cash | ||
Notes Receivable | |||
Interest Revenue | |||
b. June 30 | Accounts Payable-Skyline Supply Co. | ||
Miscellaneous Expense | |||
Petty Cash |
Feedback
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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