The bank statement for the checking account of Management Systems Inc. (MSI) sho
ID: 2521764 • Letter: T
Question
The bank statement for the checking account of Management Systems Inc. (MSI) showed a December 31, 2018, balance of $15,434.12. Information that might be useful in preparing a bank reconciliation is as follows: Outstanding checks were $1,401.45. The December 31, 2018, cash receipts of $615 were not deposited in the bank until January 2, 2019. One check written in payment of rent for $254 was correctly recorded by the bank but was recorded by MSI as a $269 disbursement. In accordance with prior authorization, the bank withdrew $530 directly from the checking account as payment on a mortgage note payable. The interest portion of that payment was $390. MSI has made no entry to record the automatic payment. Bank service charges of $22 were listed on the bank statement. A deposit of $915 was recorded by the bank on December 13, but it did not belong to MSI. The deposit should have been made to the checking account of MIS, Inc. The bank statement included a charge of $65 for an NSF check. The check was returned with the bank statement and the company will seek payment from the customer. MSI maintains a $280 petty cash fund that was appropriately reimbursed at the end of December. According to instructions from MSI on December 30, the bank withdrew $14,000 from the account and purchased U.S. Treasury bills for MSI. MSI recorded the transaction in its books on December 31 when it received notice from the bank. Half of the Treasury bills mature in two months and the other half in six months.
Required: 1. Prepare a bank reconciliation for the MSI checking account at December 31, 2018. You will have to compute the balance per books.
Prepare a bank reconciliation for the MSI checking account at December 31, 2018. You will have to compute the balance per books. (Round your answers to 2 decimal places.)
2. Prepare any necessary adjusting journal entries indicated.
Record transaction to correct error in recording cash disbursement for rent.
Note: Enter debits before credits.
Record credits to cash revealed by the bank reconciliation. Use the miscellaneous expense account to record the bank service charges.
Note: Enter debits before credits.
3. What amount would MSI report as cash and cash equivalents in the current asset section of the December 31, 2018, balance sheet?
What amount would MSI report as cash and cash equivalents in the current asset section of the December 31, 2018, balance sheet? (Round your answer to 2 decimal places.)
What amount would MSI report as cash and cash equivalents in the current asset section of the December 31, 2018, balance sheet? (Round your answer to 2 decimal places.)
Explanation / Answer
Balance per bank statement 15,434.12 Add: Rent Payment 254.00 mortgage note payable 530.00 Bank service charges 22.00 NSF check 65.00 petty cash 280.00 Cash receipts 615.00 Less: Outstanding checks 1,401.45 Rent Payment 269.00 deposit of Wrongly recorded 915.00 Corrected cash balance 14,614.67 Balance as per Books 14,614.67 Add: Outstanding checks 1,401.45 Rent Payment 269.00 Deposit of Wrongly recorded 915.00 Less: Rent Payment 254.00 mortgage note payable 530.00 Bank service charges 22.00 NSF check 65.00 petty cash 280.00 Cash receipts 615.00 15,434.12 General Journal Debit Credit Cash 15.00 To Rent 15 General Journal Debit Credit Mortgage note payable 530.00 miscellaneous expense 22.00 NSF check Charges 65.00 Cash 617.00 Cash and cash equivalents: Cash Balance as per books 14,614.67 14,012.67 Rent Correction 15.00 Mortgage note payable (530.00) miscellaneous expense (22.00) NSF check Charges (65.00) Treasury bills 14,000.00 Cash and cash equivalents: 28,012.67
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