Financial Accounting Project II.

The bank section of the bank reconciliation for the Jolly Company at December 31,2009 was as follows:

JOLLY COMPANY

Bank Reconciliation

December 31, 2009

Cash balance per bank $13,950.70

Add: Deposits in transit 2,348.20

16,298.90

Less: Outstanding checks

Check Number Check Amount

5551 $2,175.50

5571 844.50

5572 1,521.75

5574 995.00

5575 670.50 6,207.25

Adjusted cash balance per bank $10,091.65

The adjusted cash balance per bank agreed with the cash balance per books at December 30.

The January bank statement showed the following checks and deposits.

Check Date Number Amount

1-1 5551 $2,175.50

1-2 5571 844.50

1-4 5572 1,521.75

1-8 5576 1,300.00

1-10 5577 2,130.00

1-15 5579 3,233.00

1-27 5580 600.00

1-28 5581 475.50

1-29 5583 1,140.00

1-30 5586 870.30

1-31 5587 1,640.70

Total $15,931.25

Date Deposit Amount

1-1 $2,348.20

1-4 1,998.20

1-8 2,135.10

1-16 2,562.80

1-24 3,478.00

1-26 2,567.30

1-29 2,886.20

1-30 1,025.00

Total $19,000.80

The cash records per books for January showed the following:

Cash Payments Journal Cash Receipts Journal

Date Number Amount Date Number Amount Date Amount

1-1 5576 $1,300.00 1-20 5583 $ 1,140.00 1-3 $1,998.20

1-2 5577 2,130.00 1-22 5584 983.00 1-7 2,135.10

1-2 5578 579.10 1-23 5585 1,389.50 1-15 2,562.80

1-4 5579 3,233.00 1-24 5586 780.30 1-23 3,487.00

1-8 5580 600.00 1-30 5587 1,640.70 1-25 2,567.30

1-10 5581 475.50 Total $15,052.30 1-28 2,886.20

1-17 5582 801.20 1-30 1,025.00

1-31 2,347.00

Total $19,008.60

The bank statement contained two memoranda:

A credit of $2,655 for the collection of a $2,500 note for Jolly Company plus interest of $190 and less a collection fee of $35.00. Jolly Company has not accrued any interest on the note.

2. A debit of $633.45 for an NSF check written by J. Smith, a customer. On January 31, the check had not been re-deposited in the bank.

At January 31, the cash balance per the books was $14,206.15 and the cash balance per the bank statement was $19,200.00.

The bank did not make any errors but Jolly Company made two errors.

Instructions

(a) Prepare the bank reconciliation at January 31, 2010

(b) Prepare the adjusting entries based on the reconciliation. (Note: The correction of any errors pertaining to recording checks should be made to Accounts Payable. The correction of any errors relating to recording cash receipts should be made to Accounts Receivable.)