ACC 221 Study Guide - Final Guide: Bank Reconciliation, Accounts Receivable, Financial Statement
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The following data were accumulated for use in reconciling thebank account of Creative Design Co. for August 20Y6:
| 1. | Cash balance according to thecompanyâs records at August 31, $20,870. |
| 2. | Cash balance according to the bankstatement at August 31, $37,600. |
| 3. | Checks outstanding, $23,375. |
| 4. | Deposit in transit not recorded bybank, $7,500. |
| 5. | A check for $100 in payment of anaccount was erroneously recorded in the check register as$1,000. |
| 6. | Bank debit memo for servicecharges, $45. |
| A. | Prepare a bank reconciliation,using the format shown in Exhibit 13 . Refer to the Amount Descriptions list provided for the exactwording of the answer choices for text entries. For those boxes inwhich you must enter subtracted or negative numbers use a minussign. | |||||||||||||||||||
| B. | If the balance sheet wereprepared for Creative Design Co. on August 31 what amount should bereported for cash? | |||||||||||||||||||
| C. | Must a bank reconciliation always balance(reconcile)?
|
Bank Reconciliation and Entries
The cash account for Brentwood Bike Co. at May 1 indicated a balance of $14,780. During May, the total cash deposited was $74,910 and checks written totaled $69,550. The bank statement indicated a balance of $25,390 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
Checks outstanding totaled $11,310.
A deposit of $9,210, representing receipts of May 31, had been made too late to appear on the bank statement.
The bank had collected for Brentwood Bike Co. $4,870 on a note left for collection. The face of the note was $4,490.
A check for $360 returned with the statement had been incorrectly charged by the bank as $630.
A check for $850 returned with the statement had been recorded by Brentwood Bike Co. as $580. The check was for the payment of an obligation to Adkins Co. on account.
Bank service charges for May amounted to $60.
A check for $1,120 from Jennings Co. was returned by the bank because of insufficient funds.
Instructions:
1. Prepare a bank reconciliation as of May 31.
| Brentwood Bike Co. | ||
| Bank Reconciliation | ||
| May 31 | ||
| Cash balance according to bank statement | $ | |
| Add deposit of May 31, not recorded by bank | $ | |
| Add bank error in charging check as $630 instead of $360 | ||
| $ | ||
| Deduct outstanding checks | ||
| Adjusted balance | $ | |
| Cash balance according to company's records | $ | |
| Add note and interest collected by bank | ||
| $ | ||
| Deduct check returned because of insufficient funds | $ | |
| Deduct bank service charges | ||
| Deduct error in recording check | ||
| Adjusted balance | $ | |
2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank.
| a. May 31 | Cash | ||
| Notes Receivable | |||
| Interest Revenue | |||
| b. May 31 | Accounts Payable-Adkins Co. | ||
| Accounts Receivable-Jennings Co. | |||
| Miscellaneous Expense | |||
| Cash |
3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
$
I STARTED BUT I AM NOT SURE WHATS CORRECT
Bank Reconciliation and Entries
The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,930. During May, the total cash deposited was $70,330 and checks written totaled $65,300. The bank statement indicated a balance of $23,840 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
Checks outstanding totaled $10,620.
A deposit of $8,650, representing receipts of May 31, had been made too late to appear on the bank statement.
The bank had collected for Brentwood Bike Co. $4,570 on a note left for collection. The face of the note was $4,220.
A check for $360 returned with the statement had been incorrectly charged by the bank as $630.
A check for $630 returned with the statement had been recorded by Brentwood Bike Co. as $360. The check was for the payment of an obligation to Adkins Co. on account.
Bank service charges for May amounted to $70.
A check for $1,050 from Jennings Co. was returned by the bank because of insufficient funds.
Instructions:
1. Prepare a bank reconciliation as of May 31.
| Brentwood Bike Co. | ||
| Bank Reconciliation | ||
| May 31 | ||
| Cash balance according to bank statement | $ | |
| Add deposit of May 31, not recorded by bank | $ | |
| Add bank error in charging check as $630 instead of $360 | ||
| $ | ||
| Deduct outstanding checks | ||
| Adjusted balance | $ | |
| Cash balance according to company's records | $ | |
| Add note and interest collected by bank | ||
| $ | ||
| $ | ||
| Deduct error in recording check | ||
| Adjusted balance | $ | |
2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank.
| a. May 31 | Cash | ||
| Notes Receivable | |||
| Interest Revenue | |||
| b. May 31 | Accounts Payable-Adkins Co. | ||
3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
$
