The accounting records for Delta Driving School shows a cash balance of $14,134

ID: 2422325 • Letter: T

Question

The accounting records for Delta Driving School shows a cash balance of $14,134 on February 28, 2012. On the evening of February 28, company receipts of $1,250 were placed in the bank's night deposit drop box; this deposit was processed by the bank on March 1. The February 28 bank statement shows balance of $18,877, including collection of a $6,000 note receivable plus $55 of interest earned, a service charge of $40, and a $1,550 debit memo for the payment of the company's utility bill. All of the checks that the company had written during January were listed on the bank statement except for check #1908 in the amount of $1,528.

A.) Prepare a bank reconcilliation to calculate the company's adjusted cash balance at February 28, 2012.

B.) Prepare the journal entries needed to adjust the cash records as a result of the bank reconcilliation procedures.

Explanation / Answer

Bank Reconciliation

Balance as per bank $18,877

Add:Checks in transit 1,250

less:outstanding checks ( 1,528)

Balance adjusted $18,599

Balance as per cash basis $14,134

Add:Note recievable 6,000

interest earned 55 6,055

20,189

less:

Debit memo (1,550)

Service charge (40)

Adjusted balance $18,599

Jouranl entries