The cash account for American Medical Co. at April 30 indicated a balance of $33

Question

The cash account for American Medical Co. at April 30 indicated a balance of $334,985. The bank statement indicated a balance of $388,600 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

Bank service charges for April amounted to $145.

Amount Descriptions

Bank error in charging check as $240 instead of $420

Bank error in charging check as $420 instead of $240

Bank service charges

Check for $420 returned because of insufficient funds

Deposit of April 30, not recorded by bank

Error in recording check

Error in recording April 30 deposit

Outstanding checks

Note and interest collected by bank

If a balance sheet is prepared for American Medical Co. on April 30, what amount should be reported as cash?

3. If a balance sheet is prepared for American Medical Co. on April 30, what amount should be reported as cash?

A. Checks outstanding totaled $61,280. B. A deposit of $42,500, representing receipts of April 30, had been made too late to appear on the bank statement. C. The bank collected $42,000 on a $40,000 note, including interest of $2,000. D. A check for $7,600 returned with the statement had been incorrectly recorded by American Medical Co. as $760. The check was for the payment of an obligation to Targhee Supply Co. for a purchase on account. E. A check drawn for $240 had been erroneously charged by the bank as $420. F.

Bank service charges for April amounted to $145.

Amount Descriptions

Bank error in charging check as $240 instead of $420

Bank error in charging check as $420 instead of $240

Bank service charges

Check for $420 returned because of insufficient funds

Deposit of April 30, not recorded by bank

Error in recording check

Error in recording April 30 deposit

Outstanding checks

Note and interest collected by bank

Explanation / Answer

1. Reconciliation Statement

Balance as per books of account 334985

Add: Checks outstanding 61280

Less: Deposit 42500

Add: Note received    42000

Less: incorrectly recorded by American Medical Co 6840 (7600-760)

Less: Error by Bank 180 (420-240)

Less: Bank Charges 145

Balance as per Bank 338600

2. Bank a/c dr    61280

  to Cheque issued but not clear    61280

(b) Cheque deposit but not clear 42500

to Bank 42500

(c) Bank A/c dr 42000

to Note receivables 40000

to Interest income 2000

(d) Targhee supply dr 6840

to Bank 6840

(e) Receivable from Bank dr 180

to Bank 180

(f) Bank Charges a/c dr 145

to Bank 145

3. $ 338600 after journalised the entry

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