Problem - Preparation of bank reconciliation and recording adjustments LO6 The bank reconciliation prepared by Gatz Company on May 31, 2020, appeared as follows: CHAPTER 7 Internal Control and Cash CHECK FIGURE Austed book balance $2.40154 Gate Company Bank Reconciliation May 31, 2020 $ 9.564 35 Book balance $2005 A 982 17 $10.546 52 Oding cheques 1816 $ 655.99 1.800.00 Deduct NSF cheque plus service charge Bank service charge. Adjusted book balance $11.900.50 65.00 2.455.99 $ 8.090.53 Adjusted bank balance 11.9550 $ 8.000 The Cash account in the general ledger appeared as follows on June 30 (Gatz uses only a general journal to record transactions): Date Explanation Cash PR Debit Credit Acct. No. 101 Balance 2020 May 31 June 1 1 3 GJ16 GJ16 GJ16 GJ16 GJ16 GJ16 GJ16 1.865.30 112.70 650.84 2,018.45 Balance Cheque 1883 Cheque 1884 Cheque 1885 Cheque #886 Deposit Cheque 1887 Cheque 1888 Cheque #889 Deposit Cheque #890 Cheque #891 Cheque #892 12 4.285.26 8,090.53 6.225 23 6,112.53 5,461.69 3,443.24 7,728.50 7,303.35 4.262.75 3.288.63 12 12 425.15 3,040.60 974.12 18 20 3,515.60 21 GJ16 GJ16 GJ16 GJ16 GJ16 6,804.23 24 2.640.00 1,406.24 2.590.81 75.99 Cheque 1893 Deposit 29 GJ16 4,164.23 2.757.99 167.18 91.19 1,936.54 GJ16 1,845.35 The following bank statement is available for June: CHAPTER 7 Internal Control and Cash Bank Statement To: Gatz Company Cheques/Charges June 30, 2020 Bank of Montreal 3603 #884 06/01 #883 06/04 +876 06/09 1889 06/12 #882 06/14 887 06/18 1885 06/20 1891 06/21 #886 06/29 SC 06/30 NSF Not Sufficient Funds 112.70 1,86530 655 99 974.12 1,800.00 245.15 650.84 1.046 24 2018.45 75.00 SC Service Charge Deposits/Credits Balance 05/31 9,564.35 05/01 982.17 10,433.82 8.568.52 05/09 4.285.26 12.197.79 11.223.67 9.423.67 06/18 3.515.60 12.694.12 12,043.28 10.997.04 8,978.59 06/30 8,903.59 PMT - Principal INT = Interest Payment 50 53 to Required a. Prepare a bank reconciliation at June 30, 2020. Assume that any errors made were by the bookkeeper (cheque #887 was for office supplies; cheque #891 was for utilities expense). b. Prepare the necessary entries resulting from the bank reconciliation Analysis Component: You have been employed with Gatz Company since June 1, 2020, and part of your job is writing and recording cheques as well as preparing the bank reconciliation. To your surprise, the person you replaced brought in the June bank statement as it had been mailed to her home. While preparing the June bank reconciliation, you notice that cheque #882 for $1,800 cleared the bank in June but is not among the cancelled cheques. What should you do? Explain. and recording adiustments LO6
