The cash account for Capstone Medical Co. at November 30, 2016, indicated a bala

Question

The cash account for Capstone Medical Co. at November 30, 2016, indicated a balance of $93,115. The bank statement indicated a balance of $125,800 on November 30, 2016. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

A. Checks outstanding totaled $30,060.

B. A deposit of $19,240, representing receipts of November 30, had been made too late to appear on the bank statement.

C. The bank collected $24,075 on a $22,500 note, including interest of $1,575.

D. A check for $1,800 returned with the statement had been incorrectly recorded by Capstone Medical Co. as $180. The check was for the payment of an obligation to ABC Supply Co. for a purchase on account.

E. A check drawn for $390 had been erroneously charged by the bank as $930.

F. Bank service charges for November amounted to $50. Instructions 1.

Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.“Deduct:” or “Add:” will automatically appear if it is 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. If a balance sheet were prepared for Capstone Medical Co. on November 30, 2016, what amount should be reported as cash?

Explanation / Answer

Journalize the necessary entries. The accounts have not been closed.

Bank Reconciliation Cash balance according to bank statement 1,25,800 ADD Deposit of November 30, not recorded by bank 19240 Bank error in charging check as $390instead of $930 540 19780 Deduct: Outstanding checks 30060 Adjusted balance 115520 Cash balance according to company’s records 93115 Add proceeds of note collected by bank, including 24075 Deduct: Error in recording check 1800-180 1620 Bank service charges 50 1670 Adjusted balance 115520

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