ercise 6-10A Adjusting the cash account As of June 30, 2016, the bank statement

Question

ercise 6-10A Adjusting the cash account As of June 30, 2016, the bank statement showed an ending balance of $19.500. The unadjusted Cash account balance was S15.200. The following information is available 1. Deposit in transit, $2,400 it memo in bank statement for interest earned in June, S30. 3. Outstanding check, S6,690. 4. Debit memo for service charge, $20. Required a Determine the true cash balance by preparing a bank reconciliation as of June 30, 2016 using the preceding information. h Record in general journal format the adjusting entries necessary to correct the unadjusted book balance.

Explanation / Answer

(a) Bank Reconciliation Statement

Unadjusted Bank Balance on June 30,2016

$ 19500

Add: Deposit in Transit

$ 2400

Less: Outstanding Check

$ 6690

True Cash Balance on June 30,2016

$ 15210

Unadjusted Book Balance on June 30,2016

$ 15200

Add: Credit Memo for Interest Earned

$ 30

Less: Debit Memo for Service Charge

$ 20

True Cash Balance on June 30,2016

$ 15210

(b) Journal Entries to correct the unadjusted book balance

1.

Cash A/c            Dr

$ 30

      To Interest Revenue A/c         Cr

$ 30

2.

Bank Service Charge Expense A/c                 Dr

$ 20

      To Cash A/c                      Cr

$ 20

Unadjusted Bank Balance on June 30,2016

$ 19500

Add: Deposit in Transit

$ 2400

Less: Outstanding Check

$ 6690

True Cash Balance on June 30,2016

$ 15210

Unadjusted Book Balance on June 30,2016

$ 15200

Add: Credit Memo for Interest Earned

$ 30

Less: Debit Memo for Service Charge

$ 20

True Cash Balance on June 30,2016

$ 15210

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