a. Checks outstanding totaled $17,865.
b. A deposit of $9,150, representing receipts of July 31, had been made too late to appear on the bank statement.
c. The bank had collected $6,095 on a note left for collection. The face of the note was $5,750.
d. A check for $390 returned with the statement had been incorrectly recorded by Stone Systems as $930. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account.
e. A check drawn for $1,810 had been incorrectly charged by the bank as $1,180.
f. Bank service charges for July amounted to $80.
Instructions
1. Prepare a bank reconciliation.
2. Journalize the necessary entries. The accounts have not been closed.
3. If a balance sheet were prepared for Stone Systems on July 31, 2014, what amount should be reported as cash?
Answers:
1.
STONE SYSTEMS
Bank Reconciliation
July 31, 2014
Cash balance according to bank statement $33,650
Add deposit of July 31, not recorded by bank 9,150
$42,800
Deduct: Outstanding checks $17,865
Bank error in charging check as $1,180 instead
of $1,810 630 18,495
Adjusted balance $24,305
Cash balance according to company’s records $17,750
Add: Proceeds of note collected by bank, including
$345 interest $ 6,095
Error in recording check 540 6,635
$24,385
Deduct bank service charges 80
Adjusted balance $24,305
2.
Cash 6,635
Notes Receivable 5,750
Interest Revenue 345
Accounts Payable—Holland Co. 540
Miscellaneous Expense 80
Cash 80
3. $24,305; the adjusted balance from the bank reconciliation should be reported
as cash on the July 31, 2014, balance sheet for Stone Systems.