El Gato Painting Company maintains a checking account at American Bank. Bank sta
ID: 2421519 • Letter: E
Question
El Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at the end of each month. The November 30, 2016, reconciliation of the bank balance is as follows:
Balance per bank, November 30
$3,231
Add: Deposits outstanding
1,200
Less: Checks outstanding
#363
$123
#365
201
#380
56
#381
86
#382
340
(806)
Adjusted balance per bank, November 30
$3,625
The company's general ledger checking account showed the following for December:
Balance, December 1
$ 3,625
Receipts
42,650
Disbursements
(41,853)
Balance, December 31
$ 4,422
The December bank statement contained the following information:
Balance, December 1
$3,231
Deposits
43,000
Checks processed
(41,918)
Service charges
(22)
NSF checks
(440)
Balance, December 31
$3,851
The checks that were processed by the bank in December include all of the outstanding checks at the end of November except for check#365. In addition, there are some December checks that had not been processed by the bank by the end of the month. Also, you discover that check#411 for $320 was correctly recorded by the bank but was incorrectly recorded on the books as a $230 disbursement for advertising expense. Included in the bank's deposits is a $1,300 deposit incorrectly credited to the company's account. The deposit should have been posted to the credit of the Los Gatos Company. The NSF checks have not been redeposited and the company will seek payment from the customers involved.
Required:
Prepare a bank reconciliation for the El Gato checking account at December 31, 2016.
Prepare any necessary adjusting journal entries indicated.
El Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at the end of each month. The November 30, 2016, reconciliation of the bank balance is as follows:
Balance per bank, November 30
$3,231
Add: Deposits outstanding
1,200
Less: Checks outstanding
#363
$123
#365
201
#380
56
#381
86
#382
340
(806)
Adjusted balance per bank, November 30
$3,625
The company's general ledger checking account showed the following for December:
Balance, December 1
$ 3,625
Receipts
42,650
Disbursements
(41,853)
Balance, December 31
$ 4,422
The December bank statement contained the following information:
Balance, December 1
$3,231
Deposits
43,000
Checks processed
(41,918)
Service charges
(22)
NSF checks
(440)
Balance, December 31
$3,851
The checks that were processed by the bank in December include all of the outstanding checks at the end of November except for check#365. In addition, there are some December checks that had not been processed by the bank by the end of the month. Also, you discover that check#411 for $320 was correctly recorded by the bank but was incorrectly recorded on the books as a $230 disbursement for advertising expense. Included in the bank's deposits is a $1,300 deposit incorrectly credited to the company's account. The deposit should have been posted to the credit of the Los Gatos Company. The NSF checks have not been redeposited and the company will seek payment from the customers involved.
Required:
Prepare a bank reconciliation for the El Gato checking account at December 31, 2016.
Prepare any necessary adjusting journal entries indicated.
Explanation / Answer
Balance per bank statement $ 3851
Add: Deposits outstanding $2,150
Deduct:
a) Bank error - deposit incorrectly credited to company account ( 1300 )
b) Checks outstanding ( 831 )
Corrected cash balance $ 3870
Necessary Journal entry
Advertisitng expenses 90
cr, bank account 90
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