PR 8-3B Bank reconciliation and entries
The cash account for Ambulance Systems at February 29, 2012, indicated a balance of $20,580. The bank statement indicated a balance of $24,750 on February 29, 2012. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:
a. Checks outstanding totaled $9,300.
b. A deposit of $12,000, representing receipts of February 29, had been made too late to appear on the bank statement.
c. The bank had collected $6,240 on a note left for collection. The face of the note was $6,000.
d. A check for $140 returned with the statement had been incorrectly recorded by Ambulance Systems as $410. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account.
e. A check drawn for $725 had been incorrectly charged by the bank as $275.
f. Bank service charges for February amounted to $90.
Instructions
1. Prepare a bank reconciliation.
2. Journalize the necessary entries. The accounts have not been closed.
3. If a balance sheet were prepared for Ambulance Systems on February 29, 2012, what amount should be reported as cash?
Answer:
1. AMBULANCE SYSTEMS
Bank Reconciliation
February 29, 2012
Cash balance according to bank statement................ $24,750
Add deposit of February 29, not recorded by bank.... 12,000
$36,750
Deduct: Outstanding checks ...................................... $9,300
Bank error in charging check as $275
instead of $725 .......................................... 450 9,750
Adjusted balance........................................................... $27,000
Cash balance according to company’s records ......... $20,580
Add: Proceeds of note collected by bank, including
$240 interest.................................................... $6,240
Error in recording check .................................... 270 6,510
$27,090
Deduct bank service charges....................................... 90
Adjusted balance........................................................... $27,000
2. Cash................................................................................ 6,510
Notes Receivable ..................................................... 6,000
Interest Revenue ...................................................... 240
Accounts Payable—Holland Co. ............................ 270
Miscellaneous Administrative Expense....................... 90
Cash .......................................................................... 90
3. $27,000; the adjusted balance from the bank reconciliation should be reported
as cash on the February 29, 2012, balance sheet for Ambulance Systems.
a. Checks outstanding totaled $9,300.
b. A deposit of $12,000, representing receipts of February 29, had been made too late to appear on the bank statement.
c. The bank had collected $6,240 on a note left for collection. The face of the note was $6,000.
d. A check for $140 returned with the statement had been incorrectly recorded by Ambulance Systems as $410. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account.
e. A check drawn for $725 had been incorrectly charged by the bank as $275.
f. Bank service charges for February amounted to $90.
Instructions
1. Prepare a bank reconciliation.
2. Journalize the necessary entries. The accounts have not been closed.
3. If a balance sheet were prepared for Ambulance Systems on February 29, 2012, what amount should be reported as cash?
Answer:
1. AMBULANCE SYSTEMS
Bank Reconciliation
February 29, 2012
Cash balance according to bank statement................ $24,750
Add deposit of February 29, not recorded by bank.... 12,000
$36,750
Deduct: Outstanding checks ...................................... $9,300
Bank error in charging check as $275
instead of $725 .......................................... 450 9,750
Adjusted balance........................................................... $27,000
Cash balance according to company’s records ......... $20,580
Add: Proceeds of note collected by bank, including
$240 interest.................................................... $6,240
Error in recording check .................................... 270 6,510
$27,090
Deduct bank service charges....................................... 90
Adjusted balance........................................................... $27,000
2. Cash................................................................................ 6,510
Notes Receivable ..................................................... 6,000
Interest Revenue ...................................................... 240
Accounts Payable—Holland Co. ............................ 270
Miscellaneous Administrative Expense....................... 90
Cash .......................................................................... 90
3. $27,000; the adjusted balance from the bank reconciliation should be reported
as cash on the February 29, 2012, balance sheet for Ambulance Systems.
