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Sunshine Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement

Sunshine Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of July 31 have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account.

BANK RECONCILIATION FOR PRECEDING MONTH (DATED JUNE 30):
Cash balance according to bank statement $9,422.80
Add deposit of June 30, not recorded by bank 780.80
$10,203.60
Deduct outstanding checks:
No. 580 $310.10
No. 602 85.50
No. 612 92.50
No. 613 137.50 625.60
Adjusted balance $ 9,578.00
Cash balance according to companys records $ 9,605.70
Deduct service charges 27.70
Adjusted balance $ 9,578.00
CASH ACCOUNT:
Balance as of July 1: $9,578.00
CASH RECEIPTS FOR MONTH OF JULY: $6,465.42

DUPLICATE DEPOSIT TICKETS:

Date and amount of each deposit in July:

Date

Amount

Date

Amount

Date

Amount

July 2 $569.50 July 12 $580.70 July 23 $713.45
5 701.80 16 600.10 26 601.50
9 819.24 19 701.26 31 1,177.87

CHECKS WRITTEN: Number and amount of each check issued in July:

Check No.

Amount

Check No.

Amount

Check No.

Amount

614 $243.50 621 $309.50 628 $837.70
615 350.10 622 Void 629 329.90
616 279.90 623 Void 630 882.80
617 395.50 624 707.01 631 1,081.56
618 435.40 625 158.63 632 325.40
619 320.10 626 550.03 633 310.08
620 238.87 627 381.73 634 241.71

Total amount of checks issued in July: $8,379.42

JULY BANK STATEMENT:

Click here to view.

Required:
1. Prepare a bank reconciliation as of July 31. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. (Note: Deduct, Add, No. or colons (:) will automatically appear if required.)
2. Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles.
3. What is the amount of Cash that should appear on the balance sheet as of July 31?
4. Assume that a canceled check for $180 has been incorrectly recorded by the bank as $1,800. Select how the error would be included in a bank reconciliation and how it should be corrected.
CHART OF ACCOUNTS
SUNSHINE INTERIORS
General Ledger
ASSETS
110 Cash
111 Petty Cash
120 Accounts Receivable
131 Notes Receivable
141 Merchandise Inventory
145 Office Supplies
146 Store Supplies
151 Prepaid Insurance
181 Land
191 Office Equipment
192 Accumulated Depreciation-Office Equipment
193 Store Equipment
194 Accumulated Depreciation-Store Equipment
LIABILITIES
210 Accounts Payable
221 Notes Payable
222 Interest Payable
231 Salaries Payable
241 Sales Tax Payable
EQUITY
310 Owner, Capital
311 Owner, Drawing
312 Income Summary
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Merchandise Sold
515 Credit Card Expense
516 Cash Short and Over
520 Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Insurance Expense
534 Office Supplies Expense
535 Rent Expense
536 Repairs Expense
537 Selling Expenses
538 Store Supplies Expense
561 Depreciation Expense-Office Equipment
562 Depreciation Expense-Store Equipment
590 Miscellaneous Expense
710 Interest Expense
Labels
Cash and cash equivalents
Outstanding checks
Proceeds of note collected by bank
Amount Descriptions
Adjusted balance
Check returned because of insufficient funds
Deposit of July (insert day), not recorded by bank
Error in recording Check No. (insert check number)
Error in recording July (insert day) deposit
Interest
Principal
Service charges
(Check numbers are valid Amount Descriptions;
No. will appear automatically)

1. Prepare a bank reconciliation as of July 31. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. (Note: Deduct, Add, No. or colons (:) will automatically appear if required.)

SUNSHINE INTERIORS

Bank Reconciliation

July 31, 2016

1

Cash balance according to bank statement

2

3

4

5

6

7

8

9

10

Cash balance according to companys records

11

12

13

14

15

16

17

18

19

2. Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

3. What is the amount of Cash that should appear on the balance sheet as of July 31?

4. Assume that a canceled check for $180 has been incorrectly recorded by the bank as $1,800. Select how the error would be included in a bank reconciliation and how it should be corrected.

Treatment:

Addition to cash per bank statement

Deduction from cash per companys records

Deduction from cash per bank statement

Addition to cash per companys records

Not included in a bank reconciliation

To correct:

Journalize an entry adding $540 to cash

Journalize an entry deducting $540 from cash

Journalize an entry deducting $930 from cash

Request that the bank correct the error

Journalize a correcting entry adding $930 to cash

Deduct from the amount of bank service charges

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