The cash account for Capstone Medical Co. at November 30, 2016, indicated a bala

Question

The cash account for Capstone Medical Co. at November 30, 2016, indicated a balance of $89,775. The bank statement indicated a balance of $125,160 on November 30, 2016. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items Amount Descriptions Amount Descriptions Bank error in charging check as $290 instead of $920 Bank error in charging check as $920 instead of $290 Bank service charges Check for $920 returned because of insufficient funds Deposit of November 30, not recorded by bank Error in recording check Error in recording November 30 deposit Outstanding checks Proceeds of note collected by bank, including $1,575 interest A. Checks outstanding totaled $31,540 B. A deposit of $18,000, representing receipts of November 30, had been made too late to appear on the bank statement. C. The bank collected $24,075 on a $22,500 note, including interest of $1,575 D. A check for $1,700 returned with the statement had been incorrectly recorded by Capstone Medical Co. as $170. The check was for the payment of an obligation to ABC Supply Co. for a purchase on account. E. A check drawn for $290 had been erroneously charged by the bank as $920. F. Bank service charges for November amounted to $70 Instructions 1. Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Deduct: or "Add:" will automatically appear if it is required. utstanding totaled $31,540 2. Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of $18,000, representing recel nt. k collected $24,075 on a $22,50 of account titles. 3. If a balance sheet were prepared for Capstone Medicai Co. on November 30, 2016, what amount should be reported as cash?

Explanation / Answer

ans)

1.

Capstone medical co.Bank reconcilation

November 30, 2016

Cash balance according to bank statement $125160

Add deposit of Nov 30, not recorded bybank 18000   

Add bank error incharging check as$920 instead of$290 630 18630

143790

Deduct outstanding checks (31540)

Adjusted balance 112250

Cash balance according to company’srecords 89775

Add proceeds of note collected 24075

113850

Deduct error inrecording check byRemedy medical Co (1530)

Deduct bank servicecharges (70)   

Adjusted balance 112250

2)

a) Cash 24075

Notes Receivable 22500

Interest Revenue 1575

b) ABC supply co 1530

  Miscellaneous exp. 70

  Cash 1600

3) If a balance sheet were prepared for capstone medical co. on November 30, 2016 it should report $112250

as cash.

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