PR 8-4B Bank reconciliation and entries
The cash account for South Bay Sports Co. on April 1, 2012, indicated a balance of $35,025. During April, the total cash deposited was $83,150, and checks written totaled $90,000. The bank statement indicated a balance of $34,345 on April 30, 2012. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
a. Checks outstanding totaled $7,700.
b. A deposit of $3,800, representing receipts of April 30, had been made too late to appear on the bank statement.
c. A check for $960 had been incorrectly charged by the bank as $690.
d. A check for $150 returned with the statement had been recorded by South Bay Sports Co. as $1,500. The check was for the payment of an obligation to Jones Co. on account.
e. The bank had collected for South Bay Sports Co. $2,600 on a note left for collection. The face of the note was $2,500.
f. Bank service charges for June amounted to $50.
g. A check for $1,900 from Valley Schools Academy was returned by the bank because of insufficient funds.
Instructions
1. Prepare a bank reconciliation as of April 30.
2. Journalize the necessary entries. The accounts have not been closed.
3. If a balance sheet were prepared for South Bay Sports Co. on April 30, 2012, what amount should be reported as cash?
Answer:
1.
SOUTH BAY SPORTS CO.
Bank Reconciliation
April 30, 2012
Balance per bank statement....................................... $34,345
Add deposit of April 30, not recorded by bank 3,800
$38,145
Deduct: Outstanding checks .................................... $ 7,700
Bank error in charging check as $690
instead of $960 ........................................ 270 7,970
Adjusted balance......................................................... $30,175
Balance per company’s records ................................ $28,175*
Add: Proceeds of note collected by bank,
including $100 interest................................. $ 2,600
Error in recording check .................................. 1,350 3,950
$32,125
Deduct: Check returned because of insufficient
funds......................................................... $ 1,900
Bank service charges.................................. 50 1,950
Adjusted balance......................................................... $30,175
*Cash balance, April 1 .............................................. $ 35,025
Plus cash deposited in April................................... 83,150
Less checks written in April ................................... (90,000)
Balance per company’s records, April 30 ............. $ 28,175
2. Cash................................................................................ 3,950
Notes Receivable ..................................................... 2,500
Interest Revenue ...................................................... 100
Accounts Payable—Jones Co................................. 1,350
Accounts Receivable—Valley Schools Academy....... 1,900
Miscellaneous Administrative Expense....................... 50
Cash .......................................................................... 1,950
3. $30,175; the adjusted balance from the bank reconciliation should be reported
as cash on the April 30, 2012, balance sheet for South Bay Sports Co.
a. Checks outstanding totaled $7,700.
b. A deposit of $3,800, representing receipts of April 30, had been made too late to appear on the bank statement.
c. A check for $960 had been incorrectly charged by the bank as $690.
d. A check for $150 returned with the statement had been recorded by South Bay Sports Co. as $1,500. The check was for the payment of an obligation to Jones Co. on account.
e. The bank had collected for South Bay Sports Co. $2,600 on a note left for collection. The face of the note was $2,500.
f. Bank service charges for June amounted to $50.
g. A check for $1,900 from Valley Schools Academy was returned by the bank because of insufficient funds.
Instructions
1. Prepare a bank reconciliation as of April 30.
2. Journalize the necessary entries. The accounts have not been closed.
3. If a balance sheet were prepared for South Bay Sports Co. on April 30, 2012, what amount should be reported as cash?
Answer:
1.
SOUTH BAY SPORTS CO.
Bank Reconciliation
April 30, 2012
Balance per bank statement....................................... $34,345
Add deposit of April 30, not recorded by bank 3,800
$38,145
Deduct: Outstanding checks .................................... $ 7,700
Bank error in charging check as $690
instead of $960 ........................................ 270 7,970
Adjusted balance......................................................... $30,175
Balance per company’s records ................................ $28,175*
Add: Proceeds of note collected by bank,
including $100 interest................................. $ 2,600
Error in recording check .................................. 1,350 3,950
$32,125
Deduct: Check returned because of insufficient
funds......................................................... $ 1,900
Bank service charges.................................. 50 1,950
Adjusted balance......................................................... $30,175
*Cash balance, April 1 .............................................. $ 35,025
Plus cash deposited in April................................... 83,150
Less checks written in April ................................... (90,000)
Balance per company’s records, April 30 ............. $ 28,175
2. Cash................................................................................ 3,950
Notes Receivable ..................................................... 2,500
Interest Revenue ...................................................... 100
Accounts Payable—Jones Co................................. 1,350
Accounts Receivable—Valley Schools Academy....... 1,900
Miscellaneous Administrative Expense....................... 50
Cash .......................................................................... 1,950
3. $30,175; the adjusted balance from the bank reconciliation should be reported
as cash on the April 30, 2012, balance sheet for South Bay Sports Co.
