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E7-25 (Bank Reconciliation and Adjusting Entries)

Aragon Company has just

received the August 31, 2010, bank statement, which is summarized below.

County National Bank

Disbursements

Receipts

Balance

Balance, August 1

$

9,369

Deposits during August

$32,200

41,569

Note collected for depositor, including $40 interest

1,040

42,609

Checks cleared during August

$34,500

8,109

Bank service charges

20

8,089

Balance, August 31

8,089

The general

ledger Cash account contained the following entries for the month of August.

Cash

Balance, August 1

10,050

Disbursements in August

35,403

Receipts during August

35,000

Deposits in transit at August 31 are $3,800, and checks outstanding at August 31

total $1,550. Cash on hand at August 31 is $310. The bookkeeper improperly

entered one check in the books at $146.50 which was written for $164.50 for

supplies (expense); it cleared the bank during the month of August.

Instructions :

(a) Prepare a bank reconciliation dated

August 31, 2010,

proceeding to a correct balance.

(b) Prepare any entries necessary to make

the books

correct and complete.

c. what amount of cash should be reported in the August 31 statement of financial position?