Problem 6-1 Bank Reconciliation LO2
The following information is available to assist you in preparing abank reconciliation for Calico Corners on May 31, 2010:
a. The balance on the May 31, 2010, bank statement is$8,432.11.
b. Not included on the bank statement is a $1,250 deposit made byCalico Corners late on May 31.
c. A comparison between the canceled checks returned with the bankstatement and the company records indicated that the followingchecks are outstanding at May 31: No. 123 $ 23.40 No. 127 145.00No. 128 210.80 No. 130 67.32
d. The Cash account on the company%u2019s books shows a balance of$9,965.34.
e. The bank acts as a collection agency for interest earned on somemunicipal bonds held by Calico Corners. The May bank statementindicates interest of $465.00 earned during the month.
f. Interest earned on the checking account and added to CalicoCorners%u2019 account during May was $54.60. Miscellaneous bankservice charges amounted to $50.00.
g. A customer%u2019s NSF check in the amount of $166.00 wasreturned with the May bank statement.
h. A comparison between the deposits listed on the bank statementand the com-pany%u2019s books revealed that a customer%u2019s checkin the amount of $123.45 was recorded on the books during May butwas never added to the company%u2019s account. The bank erroneouslyadded the check to the account of Calico Closet, which has anaccount at the same bank.
i. The comparison of deposits per the bank statement with those perthe books revealed that another customer%u2019s check in the amountof $101.10 was correctly added to the company%u2019s account. Inrecording the check on the company%u2019s books, however, theaccountant erroneously increased the Cash account by$1,011.00.
Required
1. Prepare a bank reconciliation in good form.
2. Record the necessary journal entries on the company%u2019s booksresulting from the bank reconciliation prepared in part (1)above.
3. A friend says to you: %u201CI don%u2019t know why companiesbother to prepare bank reconciliations%u2014it seems a waste oftime. Why don%u2019t they just do like I do and adjust the Cashaccount for any difference between what the bank shows as a balanceand what shows up in the books?%u201D Explain to your friend why abank reconciliation should be prepared as soon as a bank statementis received
Problem 6-1 Bank Reconciliation LO2
The following information is available to assist you in preparing abank reconciliation for Calico Corners on May 31, 2010:
a. The balance on the May 31, 2010, bank statement is$8,432.11.
b. Not included on the bank statement is a $1,250 deposit made byCalico Corners late on May 31.
c. A comparison between the canceled checks returned with the bankstatement and the company records indicated that the followingchecks are outstanding at May 31: No. 123 $ 23.40 No. 127 145.00No. 128 210.80 No. 130 67.32
d. The Cash account on the company%u2019s books shows a balance of$9,965.34.
e. The bank acts as a collection agency for interest earned on somemunicipal bonds held by Calico Corners. The May bank statementindicates interest of $465.00 earned during the month.
f. Interest earned on the checking account and added to CalicoCorners%u2019 account during May was $54.60. Miscellaneous bankservice charges amounted to $50.00.
g. A customer%u2019s NSF check in the amount of $166.00 wasreturned with the May bank statement.
h. A comparison between the deposits listed on the bank statementand the com-pany%u2019s books revealed that a customer%u2019s checkin the amount of $123.45 was recorded on the books during May butwas never added to the company%u2019s account. The bank erroneouslyadded the check to the account of Calico Closet, which has anaccount at the same bank.
i. The comparison of deposits per the bank statement with those perthe books revealed that another customer%u2019s check in the amountof $101.10 was correctly added to the company%u2019s account. Inrecording the check on the company%u2019s books, however, theaccountant erroneously increased the Cash account by$1,011.00.
Required
1. Prepare a bank reconciliation in good form.
2. Record the necessary journal entries on the company%u2019s booksresulting from the bank reconciliation prepared in part (1)above.
3. A friend says to you: %u201CI don%u2019t know why companiesbother to prepare bank reconciliations%u2014it seems a waste oftime. Why don%u2019t they just do like I do and adjust the Cashaccount for any difference between what the bank shows as a balanceand what shows up in the books?%u201D Explain to your friend why abank reconciliation should be prepared as soon as a bank statementis received
