Sunshine Interiors deposits all cash receipts each Wednesday and Friday in a night depository after banking hours. The data required to reconcile the bank statement as of July 31 have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account.
BANK RECONCILIATION FOR PRECEDING MONTH (DATED JUNE 30): Cash balance according to bank statement . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,422.80 Add deposit of June 30, not recorded by bank . . . . . . . . . . . . . . . . . . . . . . . 780.80 Deduct outstanding checks: No. 580 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $310.10 No. 602 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.50 No. 612 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.50 No. 613 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137.50 625.60 Adjusted balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,578.00 Cash balance according to company’s records . . . . . . . . . . . . . . . . . . . . . . . $ 9,605.70 Deduct bank service charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.70 Adjusted balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,578.00 CASH ACCOUNT: Balance as of July 1$ 9,578.00 CASH RECEIPTS FOR MONTH OF JULY 6,465.42 DUPLICATE DEPOSIT TICKETS: Date and amount of each deposit in July: Date Amount Date Amount Date Amount July 2 $569.50 July 12 $580.70 July 23 $ 713.45 5 701.80 16 600.10 26 601.50 9 819.24 19 701.26 31 1,177.87 CHECKS WRITTEN: Number and amount of each check issued in July: Check No. Amount Check No. Amount Check No. Amount 614 $243.50 621 $309.50 628 $ 837.70 615 350.10 622 Void 629 329.90 616 279.90 623 Void 630 882.80 617 395.50 624 707.01 631 1,081.56 618 435.40 625 158.63 632 325.40 619 320.10 626 550.03 633 310.08 620 238.87 627 381.73 634 241.71 Total amount of checks issued in July$8,379.42 AMERICAN NATIONAL BANK OF DETROIT DETROIT, MI 48201-2500 (313) 933-8547 MEMBER FDIC SUNSHINE INTERIORS * – – – – – CHECKS AND OTHER DEBITS – – – – – * – DEPOSITS – * – DATE – * – BALANCE– * No.580 310.10 No.612 92.50 780.80 07/01 9,801.00 No.602 85.50 No.614 243.50 569.50 07/03 10,041.50 No.615 350.10 No.616 279.90 701.80 07/06 10,113.30 No.617 395.50 No.618 435.40 819.24 07/11 10,101.64 No.619 320.10 No.620 238.87 580.70 07/13 10,123.37 No.621 309.50 No.624 707.01 MS 4,000.00 07/14 13,106.86 No.625 158.63 No.626 550.03 MS 160.00 07/14 12,558.20 No.627 318.73 No.629 329.90 600.10 07/17 12,509.67 No.630 882.80 No.631 1,081.56 NSF 375.00 07/20 10,170.31 No.632 325.40 No.634 241.71 701.26 07/21 10,304.46 731.45 07/24 11,035.91 601.50 07/28 11,637.41 SC 36.00 07/31 11,601.41 EC –– ERROR CORRECTION OD –– OVERDRAFT MS –– MISCELLANEOUS PS –– PAYMENT STOPPED NSF –– NOT SUFFICIENT FUNDS SC –– SERVICE CHARGE * * * * * * * * * THE RECONCILEMENT OF THIS STATEMENT WITH YOUR RECORDS IS ESSENTIAL. ANY ERROR OR EXCEPTION SHOULD BE REPORTED IMMEDIATELY. JULY BANK STATEMENT:
Instructions
1. Prepare a bank reconciliation as of July 31. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable.
2. Journalize the necessary entries. The accounts have not been closed.
3. What is the amount of Cash that should appear on the balance sheet as of July 31?
4. Assume that a canceled check for $180 has been incorrectly recorded by the bank as $1,800. Briefly explain how the error would be included in a bank reconciliation and how it should be corrected.
Answer:
1.
Cash balance according to bank statement$11,601.41
Add deposit of July 31, not recorded by bank1,177.87
Deduct outstanding checks:
No. 613$ 137.50
628837.70
633310.08 1,285.28
Adjusted balance$11,494.00
Cash balance according to company’s records* $ 7,664.00
Add: Note and interest collected by bank $4,160.00
Error in recording July 23 deposit 18.00
Error in recording Check No. 627 63.00 4,241.00
Deduct: Check returned because of insufficient funds $ 375.00
Bank service charges36.00 411.00
Adjusted balance$11,494.00
* Balance per cash in bank account, July 1..................... $ 9,578.00
Add July receipts...................................................... 6,465.42
Deduct July disbursements....................................... (8,379.42)
Balance per cash in bank account, July 31.................. $ 7,664.00
2.
20Y5
July 31 Cash4,241.00
31 Accounts Receivable375.00
Miscellaneous Expense36.00
3.
4. The error of $1,620 ($1,800 – $180) in the canceled check should be added to the
“balance according to bank statement” on the bank reconciliation. The canceled
check should be presented to the bank, with a request that the bank balance be
corrected.
