Bank Reconciliation and Entries

The cash account for Stone Systems at July 31, 20Y5, indicated a balance of $8,420. The bank statement indicated a balance of $11,040 on July 31, 20Y5. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:

1. Checks outstanding totaled $3,970.
2. A deposit of $4,140, representing receipts of July 31, had been made too late to appear on the bank statement.
3. The bank had collected $2,150 on a note left for collection. The face of the note was $2,040.
4. A check for $400 returned with the statement had been incorrectly recorded by Stone Systems as $440. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account.
5. A check drawn for $700 had been incorrectly charged by the bank as $70.
6. Bank service charges for July amounted to $30.

***My answers may be incorrect***

Required: 1. Prepare a bank reconciliation.. Stone Systems Bank Reconciliation July 31, 20YS Cash balance according to bank statement Add: Deposit in transit on July 31 Deduct: Outstanding checks 11,040 4,140 3,970 Deduct: Bank error in charging check as $70 instead of $700 630 4,600 Total deductions S 10,580 Adjusted balance Cash balance according to company's records 8,420 Adjustments: Add: Note collected by bank, including $110 interest 2,150 Add: Error in recording check by Stone Systems 40 Total additions 2,190 Deduct: Bank service charges 30 10,580 Adjusted balance 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. Cash 20YS July 31 10,610 Notes Receivable Interest Revenue Accounts Payable-Holland Co. 40 Miscellaneous Expense July 31 Cash 3. If a balance sheet were prepared for Stone Systems on July 31, 20Y5, what amount should be reported as cash