The cash account of Aguilar Co. showed a ledger balance of $3,969.85 on June 30,

ID: 2492843 • Letter: T

Question

The cash account of Aguilar Co. showed a ledger balance of $3,969.85 on June 30, 2010. The bank statement as of that date showed a balance of $4,150. Upon comparing the statement with the cash records, the following facts were determined.

1. There were bank service charges for June of $25.

2. A bank memo stated that Bao Dai’s note for $1,200 and interest of $36 had been collected on June 29, and the bank had made a charge of $5.50 on the collection. (No entry had been made on Aguilar’s books when Bao Dai’s note was sent to the bank for collection.)

3. Receipts for June 30 for $3,390 were not deposited until July 2.

4. Checks outstanding on June 30 totaled $2,136.05.

5. The bank had charged the Aguilar Co.’s account for a customer’s uncollectible check amounting to $253.20 on June 29.

6. A customer’s check for $90 had been entered as $60 in the cash receipts journal by Aguilar on June 15.

7. Check no. 742 in the amount of $491 had been entered in the cash journal as $419, and check no. 747 in the amount of $58.20 had been entered as $582. Both checks had been issued to pay for purchases of equipment.

Instructions

(a) Prepare a bank reconciliation dated June 30, 2010, proceeding to a correct cash balance.

(b) Prepare any entries necessary to make the books correct and complete.

Explanation / Answer

Answer

(a) Prepare a bank reconciliation dated June 30, 2010, proceeding to a correct cash balance.

Bank Reconciliation Statement( Aguilar Co.) dated June 30, 2010

Figures in $

Particulars

Amount

Balance as per Cash book (Dr.)

3,969.85

Bank Service charges

-25

collection of Bao Dai’s note and interest net of Bank charges

1230.5

(1,200 +36 -5.50)

Deposit in transit

-3,390

Checks outstanding on June 30

2,136.05

Charges for a customer’s uncollectible check

-253.2

A customer’s check for $90 had been entered as $60 in the cash receipts journal

($90-$60)

Check no. 742 Correction

-72

($491-$419)

check no. 747 Correction

523.8

($582-$58.20)

Balance as per bank statement (Cr.)

4,150.00

(b) Prepare any entries necessary to make the books correct and complete.

1. There were bank service charges for June of $25.

Bank Service Charges A/c Dr. $ 25

To Cash A/c Cr. $ 25

Cash A/c Dr. $ 1230.5

Bank Charges A/c Dr. $ 5.50

To Note receivable A/c Cr. $ 1200

To Interest income A/c Cr. $ 36

3. Receipts for June 30 for $3,390 were not deposited until July 2.

Deposit in Transit A/c Dr. $3,390

To Cash A/c Cr. $3,390

4. Checks outstanding on June 30 totaled $2,136.05.

No entry required in cash book

5. The bank had charged the Aguilar Co.’s account for a customer’s uncollectible check amounting to $253.20 on June 29.

Uncollectible check Charges A/c Dr. $253.20

To Cash A/c Cr. $253.20

6. A customer’s check for $90 had been entered as $60 in the cash receipts journal by Aguilar on June 15.

Cash A/c Dr. $ 30 ( $ 90 - $ 60)

To Customer A/c Cr. $ 30

Equipment A/c Dr. $ 72 ($ 491 – $ 419)

To Cash A/c Cr. $ 72

Cash A/c Dr. $ 523.8 ($ 582 - $ 58.2)

To Equipment A/c Cr. $ 523.8