The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $85,920. The bank statement indicated a balance of $127,910 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 $32,540.
B.	A deposit of $18,540, representing receipts of June 30, had been made too late to appear on the bank statement.
C.	The bank collected $29,425 on a $27,500 note, including interest of $1,925.
D.	A check for $1,350 returned with the statement had been incorrectly recorded by Pala Medical Co. as $135. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.
E.	A check drawn for $570 had been erroneously charged by the bank as $750.
F.	Bank service charges for June amounted to $40.

Instructions

1.

Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

2.

Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles.

Amount Descriptions

Adjusted balance

Bank error in charging check as $570 instead of $750

Bank error in charging check as $750 instead of $570

Bank service charges

Check for $750 returned because of insufficient funds

Deposit of June 30, not recorded by bank

Error in recording check

1. Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Pala Medical Co.

Bank Reconciliation

June 30, 20Y1

1	Cash balance according to bank statement
2	Adjustments:
3
4
5
6
7
8
9	Cash balance according to companys records
10	Adjustments:
11
12
13
14
15

2. Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6

Error in recording June 30 deposit

Outstanding checks

Proceeds of note collected by bank, including $1,925 interest

Total adjustments

3.

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

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

$