The December 31, 2011, bank statement for Packer Company and the December 2011 l

Question

The December 31, 2011, bank statement for Packer Company and the December 2011 ledger accounts for cash follow.

Bank Statement
Date          Checks            Deposits          Balance
Dec.1                                                      $48,000
2               $400;300           $17,000            64,300
4               7,000;90                                    57,210
6              120;180; 1,600                           55,310
11             500; 1,200; 70     28,000             81,540
13             480;700; 1,900                           78,460
17             12,000; 8,000                             58,460
23             60; 23,500          36,000              70,900
26             900; 2,650                                  67,350
28              2,200; 5,200                             59,950
30      17,000; 1,890; 300*     19,000             59,760
31     1,650; 1,350; 150**       5,250***          61,860

*NSF check, J. left, a customer
**Bank service charge
***Interest collected



Cash(A)
Dec 1         Balance         64,100
Deposits
Dec. 11                           28,000
23                                   36,000
30                                   19,000
31                                    13,000


Cash(A)
Checks written during december:
60           5,000            2,650
17,000     5,200           1,650
700          1,890           2,200
3,300       1,600           7,000
1,350          120             300
180              90              480
12,000      23,500         8,000
70              500            1,900
900            1,200


The November 2011 bank reconciliation showed the following: correct cash balance at November 30, $64,100; deposits in transit on November 30, $17,000; and outstanding checks on November 30, $400+$500= $900

Required:
1. Compute the deposits in transit December 31, 2011, by comparing the deposits on the bank statment to the deposits listed on the cash ledger account and the list of deposits in transit at the end of November.

2. Compute the outstanding checks at December 31, 2011, by comparing the checks listed on the bank statement with those on the cash ledger account and list of outstanding checks at the end of November.

3. Prepare a bank reconciliation at December 31, 2011.

4. Give any journal entries that should be made as a result of the bank reconciliation made by the company. Why are they necessary?

5. What total amount of cash should be reported on the December 31, 2011, balance sheet?

Explanation / Answer

Required: 1. Compute the deposits in transit December 31, 2011, by comparing the deposits on the bank statement to the deposits listed on the cash ledger account and the list of deposits in transit at the end of November. $13,000 2. Compute the outstanding checks at December 31, 2011, by comparing the checks listed on the bank statement with those on the cash ledger account and list of outstanding checks at the end of November. $5,000, $3,300, and $500 3. Prepare a bank reconciliation at December 31, 2011. Balance as per Bank statement $61,860 Add Deposit in transit 13,000 74,860 Less: Checks outstanding 8,800 Adjusted Bank Balance $66,060 ====== Balance as per Cash Book 61,260 Add : Interest credited 5,250 Less: NSF Check 300 Bank Charges 150 Adjusted Cash Balance $66,060 4. Give any journal entries that should be made as a result of the bank reconciliation made by the company. Why are they necessary? Cash $5,250 Interest revenue $5,250 Bank Charges $150 Cash $150 Accounts receivable $300 Cash $300 5. What total amount of cash should be reported on the December 31, 2011, balance sheet? Adjusted cash Balance $66,060

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