Sarcon Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement for October,

2014, indicated the following:

Balance, October 31, 2014 $7,920

Service charge for October 20

Interest earned during October 30

NSF check from Grey Corp. (deposited by Sarcon) 32

Note ($1,000) and interest ($40) collected for Sarcon from a customer 1,040

An analysis of canceled checks and deposits and the records of Sarcon revealed the following items:

Checking account balance per Sarcon books $7,170

Outstanding checks as of October 31 952

Deposit in transit at October 31 1,310

Error in recording a check issued by Sarcon. (Correct amount of the

check is $450, but was recorded as a cash disbursement of $540.

The check was issued to pay for merchandise purchases.)

90

REQUIRED:

Prepare a bank reconciliation at October 31, 2014 in proper form.

18. The following accounts are listed in a company's general ledger:

December 31, 2017 December 31, 2016

Accounts Receivable $ 12,300 $ 10,000

Certificates of Deposit (three months) 10,000 15,000

Marketable Securities 4,500 4,000

Petty Cash Fund 800 1,000

Money Market Fund 23,200 28,700

Cash in Checking Account 6,200 5,400

REQUIRED:

1. Which items are cash equivalents?

2. Explain where items that are not cash equivalents should be classified on the balance sheet.

3. What are the amount and the direction of change in cash and cash equivalents for 2017? Is the company as liquid

at the end of 2017 as it was at the end of 2016? Explain your answer.

19. Marathon Street Bank sent Flank Industries their end of month bank statement for October. The end of month

balance by the bank is $11,229. From the statement, it can be determined that a deposit for $4,250 is in transit at the

end of the statement period. Also the statement reveals that checks for $86, $106, and $95 are outstanding. Marathon

Street collected a 90 day, 12% interest $4,000 note receivable charging $20 for the service. No interest has been

accrued on the note. The bank charges a monthly account fee of $35. The end of month balance per company books

is $11,127.

REQUIRED:

Complete a bank/account reconciliation and write any necessary journal entries for the reconciliation.