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Bank reconciliation and entries The cash account for The Diplomat Co. on December 1 indicated a balance of $91,145. During December, the total cash deposited

Bank reconciliation and entries

The cash account for The Diplomat Co. on December 1 indicated a balance of $91,145. During December, the total cash deposited was $293,151, and checks written totaled $307,360. The bank statement indicated a balance of $112,675 on December 31.

Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

a). Checks outstanding totaled $42,840.

b). A deposit of $12,200, representing receipts of December 31, had been made too late to appear on the bank statement.

c). A check for $7,250 had been incorrectly charged by the bank as $2,750.

d). A check for $760 returned with the statement had been recorded by The Diplomat Co. as $7,600. The check was for the payment of an obligation to Mendez Co. on account.

e). The bank had collected for The Diplomat Co. $7,385 on a note left for collection. The face of the note was $7,000.

f). Bank service charges for December amounted to $125.

g). A check for $2,500 from Horizon Academy was returned by the bank because of insufficient funds.

Instructions

1. Prepare a bank reconciliation as of December 31.

Bank Reconciliation as of December 31:

Balance per bank statement: $112,675

Add: Deposit in transit: $12,200

Deduct: Outstanding checks: $42,840

Deduct: Bank service charges: $125

Add: Correction of error on check: $5,500 (($7,250 - $2,750))

Add: Collection of note: $385 (($7,385 - $7,000))

Deduct: NSF check: $2,500

Adjusted balance per bank: $85,455

Balance per books: $91,145

Add: Deposits in transit: $12,200

Deduct: Outstanding checks: $42,840

Add: Correction of error on check: $5,500 (($7,600 - $760))

Adjusted balance per books: $65,005

CAN YOU HELP ME WITH NUMBER 2 AND 3 PLEASE. THANK YOU.

2. Journalize the necessary entries. The accounts have not been closed.

3. If a balance sheet is prepared for The Diplomat Co. on December 31, what amount should be reported as cash?

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