4. (15 points) The Fitzgerald Company maintains a checking account at the Bank o

Question

4. (15 points) The Fitzgerald Company maintains a checking account at the Bank of the North. The bank provides a bank statement along with canceled checks on the last day of each month. The October 31, 2016, bank statement included the following information: Balance, October 1, 2016 Deposits Checks processed Service charges NSF checks Monthly loan payment deducted directly by bank from account (includes $400 in interest) 32,690 86,000 (75,200) (350) 1,600) (3,400 Balance, October 31, 2016 The company's general ledger cash (checking) account had a balance of $42,544 at the end of October. Deposits outstanding totaled $4,224, and all checks written by the company were processed by the bank except for those totaling $5,620. In addition, a check for $500 for the purchase of office furniture was incorrectly recorded by the company as a $50 disbursement. The bank correctly processed the check during October. Required: 1. Prepare a bank reconciliation for the month of October. 2. Prepare the necessary journal entries at the end of October to adjust the general ledger cash account.

Explanation / Answer

1.

2.

Fitzgerald Company Bank Reconciliation October 31, 2016 Cash balance according to bank statement 38140 Add: Deposits outstanding 4224 42364 Less: Outstanding checks 5620 Adjusted balance 36744 Cash balance according to company's records 42544 Less: NSF checks 1600 Bank service charges 350 Monthly loan and interest payment 3400 Error in recording check ($500 - $50) 450 5800 Adjusted balance 36744

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