Problem 2 (25 points)

The cash transactions and cash balances of Kitchen Delight, Inc., a manufacturer of kitchen cabinets, for the month of October were as follows:

KITCHEN DELIGHT, INC.

Bank Reconciliation

October 31, 2021

Balance per bank statement $ 66.350

Add:

Deduct:

Adjusted cash balance $____

Balance per depositors records $77,073

Add:

Deduct:

Adjusted cash balance $________

Additional information

1. The cash received on May 31 amounted to $15,000. It was left at the bank in the automatic teller machine after banking hours on October 31 and therefore was not recorded by the bank on the October statement.
2. A check paid by the bank for the purchase of office equipment was written for $579 but incorrectly recorded in the companys records as $479.
3. The bank collected a $7,000 Notes Receivable for Kitchen Delight and let them know in the October statement.
4. The bank statement also notified the company that the service charges for October amounted to $378.
5. One on Kitchen Delights best customers, Mr. Vaugh, signed a $5,000 check which the company was not able to collect since there were insufficient funds in the clients bank account.
6. Two checks signed by Kitchen Delight in payment to suppliers have not yet been collected: N 76 for $2,200 and N 52 for $555.

Instructions

1.Prepare a bank reconciliation using the information provided above. (12 points)

2. Prepare the necessary journal entries (in general journal form) to adjust the accounting records of Kitchen Delight, Inc., as of October 31. (8 points)

3. Determine the amount of cash and cash equivalents that should be reported in the companys balance sheet dated October 31. (5 points)