PR 8-3A Bank reconciliation and entries OBJ. 5 1. Adjusted balance: The cash acc

Question

PR 8-3A Bank reconciliation and entries OBJ. 5 1. Adjusted balance: The cash account for American Medical Co. at April 30 indicated a balance of $334,985 $370,000 The bank statement indicated a balance of $388,600 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items a. Checks outstanding totaled $61,280 b. A deposit of $42,500, representing receipts of April 30, had been made too late to Excel appear on the bank statement c. The bank collected $42,000 on a $40,000 note, including interest of $2,000 d. A check for $7,600 returned with the statement had been incorrectly recorded by General Ledger American Medical Co. as $760. The check was for the payment of an obligation to Show Me How Targhee Supply Co. for a purchase on account e. A check drawn for $240 had been erroneously charged by the bank as $420 f. Bank service charges for April amounted to $145 Instructions 1. Prepare a bank reconciliation 2. Journalize the necessary entries. The accounts have not been closed 3. If a balance sheet is prepared for American Medical Co. on April 30, what amount should be reported as cash?

Explanation / Answer

Bank reconcilation Balance as per bank 388,600 Add: Deposit in transit 42,500 Erroneously charged by bank 180 42,680 431,280 less: Checks outstanding 61,280 Adjusted balance as per bank 370,000 Balance as per books 334,985 Add: Note collected 42,000 376,985 less: Error in recording 6840 Bank service charge 145 6985 Adjusted cash balance 370,000 2) Entries Accounting titles & explanation Debit Credit Cash 42,000 note receivable 40,000 interest income 2,000 miscellaneous expense 145 accounts payable 6,840 cash 6,985 3) Balance to be reported as cash $370,000

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