Question
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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