The cash account for Collegiate Sports Co. on November 1 indicated a balance of $81,145. During November, the total cash deposited

The cash account for Collegiate Sports Co. on November 1 indicated a balance of $81,145. During November, the total cash deposited was $293,150, and checks written totaled $307,360. The bank statement indicated a balance of $112,675 on November 30. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

a. Checks outstanding totaled $41,840.

b. A deposit of $12,200, representing receipts of November 30, had been made too late to appear on the bank statement.

c. A check for $7,250 had been incorrectly charged by the bank as $2,750.

d. A check for $760 returned with the statement had been recorded by Collegiate Sports Co. as $7,600. The check was for the payment of an obligation to Ramirez Co. on account.

e. The bank had collected for Collegiate Sports Co. $7,385 on a note left for collection. The face of the note was $7,000.

f. Bank service charges for November amounted to $125.

g. A check for $2,500 from Hallen Academy was returned by the bank because of insufficient funds.

Instructions

1. Prepare a bank reconciliation as of November 30.

2. Journalize the necessary entries. The accounts have not been closed.

3. If a balance sheet is prepared for Collegiate Sports Co. on November 30, what amount should be reported as cash?

Answer:

1.

Cash balance according to bank statement$112,675

Add deposit of November 30, not recorded by bank 12,200

Deduct: Outstanding checks$41,840

Bank error in charging check as $2,750 instead 

of $7,2504,500 46,340

Adjusted balance$ 78,535

Cash balance according to company’s records*$ 66,935

Add:  Note and interest collected by bank $ 7,385

 Error in recording check as $7,600 instead of $760 6,840 14,225

Deduct: Check returned because of insufficient funds $ 2,500

Bank service charges125 2,625

Adjusted balance$ 78,535

* Cash balance, November 1................................................... $ 81,145

Plus cash deposited in November....................................... 293,150

Less checks written in November.......................................... (307,360)

Balance per company’s records, November 30........................ $ 66,935

2.

 Nov. 30 Cash14,225

Notes Receivable7,000

Interest Revenue385

Accounts Payable—Ramirez Co.6,840

30 Accounts Receivable—Hallen Academy 2,500

Miscellaneous Expense125

Cash2,625

3. $78,535; the adjusted balance from the bank reconciliation should be reported

as cash on the November 30 balance sheet for Collegiate Sports Co.