P8-3A

Prepare a bank reconciliation and adjusting entries.

(LO 3)

On May 31, 2017, Reber Company had a cash balance per books of $6,781.50. The bank statement from New York State Bank on that date showed a balance of $6,404.60. A comparison of the statement with the Cash account revealed the following facts.

1.The statement included a debit memo of $40 for the printing of additional company checks.

2.Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Reber Company for the correct amount.

3.Outstanding checks at May 31 totaled $576.25. Deposits in transit were $2,416.15.

4.On May 18, the company issued check No. 1181 for $685 to Lynda Carsen on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Reber Company for $658.

5.A $3,000 note receivable was collected by the bank for Reber Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.

6.Included with the cancelled checks was a check issued by Stiner Company to Ted Cress for $800 that was incorrectly charged to Reber Company by the bank.

7.On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sue Allison, a customer, to Reber Company on account.

Instructions

(a)

Prepare the bank reconciliation at May 31, 2017.

Adjusted cash balance per bank $9,044.50

(b)

Prepare the necessary adjusting entries for Reber Company at May 31, 2017.