Bank reconciliation and entries

The cash account for Stone Systems at July $31,20$Y$5,$ indicated a balance of $$7,475.$ The bank statement indicated a balance of $$9,830$ on July $31,20$Y$5.$ Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:

Checks outstanding totaled $$3,540.$

A deposit of $$3,690,$ representing receipts of July $31,$ had been made too late to appear on the bank statement.

The bank had collected $$1,920$ on a note left for collection. The face of the note was $$1,820.$

A check for $$800$ returned with the statement had been incorrectly recorded by Stone Systems as $$880.$ The check was for the payment of an obligation to Holland Co$.$ for the purchase of office supplies on account.

A check drawn for $$600$ had been incorrectly charged by the bank as $$60.$

Bank service charges for July amounted to $$35.$

Required:

Question Content Area

$1.$ Prepare a bank reconciliation.

Stone Systems

Bank Reconciliation

July $31,20$Y$5$

Line Item Description Amount Amount

Cash balance according to bank statement blank $Cash balance according to bank statement

Add: Deposit in transit on July $31$

$Deduct: Outstanding checks

Deduct: Bank error in charging check as $$60$ instead of $$600$ blank

Total deductions blank Total deductions

Adjusted balance blank $Adjusted balance

Cash balance according to company's records blank $Cash balance according to company's records

Adjustments: blank blank

$Add: Note collected by bank, including $$100$ interest

Add: Error in recording check by Stone Systems blank

Total additions blank Total additions

blank Deduct: Bank service charges

Adjusted balance blank $Adjusted balance

Question Content Area

$2.$ Journalize the necessary entries $($a$.)$ that increase cash and $($b$.)$ that decrease cash. The accounts have not been closed. If an amount box does not require an entry, leave it blank.

DateAccountDebitCredit

$20$Y$5$ July $31$

Cash Cash

Notes Receivable Notes Receivable

Interest Revenue Interest Revenue

Accounts Payable$-$Holland Co$.$ Accounts Payable$-$Holland Co$.$

July $31$

Miscellaneous Expense Miscellaneous Expense

Cash Cash

Question Content Area

$3.$ If a balance sheet were prepared for Stone Systems on July $31,20$Y$5,$ what amount should be reported as cash?