Problem

Bank reconciliation and entries

The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $166,436. The bank statement indicated a balance of $195,688 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

A. Checks outstanding totaled $19,427.

B. A deposit of $12,300, representing receipts of June 30, had been made too late to appear on the bank statement.

C. The bank collected $26,500 on a $25,000 note, including interest of $1,500.

D. A check for $4,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $400. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.

E. A check drawn for $195 had been erroneously charged by the bank as $915.

F. Bank service charges for June amounted to $55.

Instructions

1. Prepare a bank reconciliation.

2. Journalize the necessary entries.

3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?