The cash account of Marigold Co. showed a ledger balance of $19,561.25 on June 3
ID: 2590687 • Letter: T
Question
The cash account of Marigold Co. showed a ledger balance of $19,561.25 on June 30, 2017. The bank statement as of that date showed a balance of $20,750.00. Upon comparing the statement with the cash records, the following facts were determined.
Prepare a bank reconciliation dated June 30, 2017, proceeding to a correct cash balance.
Prepare entries necessary to make the books correct and complete. Use Office Expense account for bank service charges.
1. There were bank service charges for June of $125.00. 2. A bank memo stated that Bao Dai’s note for $6,000.00 and interest of $180.00 had been collected on June 29, and the bank had made a charge of $27.50 on the collection. (No entry had been made on Marigold’s books when Bao Dai’s note was sent to the bank for collection.) 3. Receipts for June 30 for $16,950.00 were not deposited until July 2. 4. Checks outstanding on June 30 totaled $10,680.25. 5. The bank had charged the Marigold Co.’s account for a customer’s uncollectible check amounting to $1,266.00 on June 29. 6. A customer’s check for $450.00 (as payment on the customer’s Accounts Receivable) had been entered as $300.00 in the cash receipts journal by Marigold on June 15. 7. Check no. 742 in the amount of $491.00 had been entered in the cash journal as $419.00, and check no. 747 in the amount of $291.00 had been entered as $2,910.00. Both checks had been issued to pay for purchase of equipment and were payments on Marigold’s Accounts Payable.Explanation / Answer
Bank Reconciliation Statement as on June 30, 2017
Balance as per cash ledger ( Corrected)
$ 22,258.25
Add:
Bao DAI's Note not recorded
$ 6,180.00
Checks Outstanding
$ 10,680.25
Less:
Service charges for June
$ 125.00
Collection charges for bao dai's note
$ 27.50
Cash not deposited
$ 16,950.00
Charges for uncollectible check
$ 1,266.00
Balance as per Bank Account
$ 20,750.00
Journal Entries for cash book correction and completion:
Bank
$ 150.00
Account receivable
$ 150.00
(being entry for $ 450 check corrected)
Account payable
$ 72.00
Bank
$ 72.00
(being cheque no. 742 corrected)
Bank
$ 2,619.00
Account payable
$ 2,619.00
(being cheque no. 747 corrected)
Bank
$ 6,180.00
Bao dai's note
$ 6,000.00
Interest
(being bao dai's note with interest recorded)
Office Expense Account
$ 1,418.00
Bank
$ 1,418.00
(being bank charges recorded)
Bank Reconciliation Statement as on June 30, 2017
Balance as per cash ledger ( Corrected)
$ 22,258.25
Add:
Bao DAI's Note not recorded
$ 6,180.00
Checks Outstanding
$ 10,680.25
Less:
Service charges for June
$ 125.00
Collection charges for bao dai's note
$ 27.50
Cash not deposited
$ 16,950.00
Charges for uncollectible check
$ 1,266.00
Balance as per Bank Account
$ 20,750.00
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