The cash account for Pala Medical Co. at June 30, 201, indicated a balance of S9

Question

The cash account for Pala Medical Co. at June 30, 201, indicated a balance of S9 7,456. The brittment ndicated a balance of S127.960 on June 30, 20 Comparng te bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling Bems A. Checks outstanding totaled $30,050 B A deposit of $19,720, representing receipts of June 30, had been made too late to appear on the bank statement C. The bank collected $22,149 on a $20,700 mote, including interest of $1,449 D. A check for $1,450 returned with the statement had been incorrectly recorded by Pala Medical Co. as 145. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account E. A check drawn for $290 had been erroneously charged by the bank as 5920 F Bank service charges for June amounted to $40 Instructions

Explanation / Answer

1) Bank Reconciliation Balance as per bank statement 127,960 Add: Deposits in transit 19,720 Error in recording (920-290) 630 20,350 148,310 less: Checks outstanding 30,050 Adjusted bank balance 118,260 Unadjusted cash balance 97,456 Add: note receivable with interest 22,149 119,605 less: Error in recording (1450-145) 1305 Bank service charge 40 1345 Adjusted cash balance 118,260 2) Accounting entries Account titles & Explanations Debit Credit cash 22,149 note receivable 20,700 interest revenue 1,449 Accounts payable 1,305 cash 1,305 Bank service charge/misc expense 40 cash 40 3) Amount to be reported as cash 118,260

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