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The cash account for Interactive Systems at February 28, 2010, indicated a balance of $7,635. The bank statement indicated a balance of $13,333 on February 28, 2010. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:

1. Checks outstanding totaled $4,118.
2. A deposit of $4,500, representing receipts of February 28, had been made too late to appear on the bank statement.
3. The bank had collected $5,200 on a note left for collection. The face of the note was $5,000.
4. A check for $290 returned with the statement had been incorrectly recorded by Interactive Systems as $920. The check was for the payment of an obligation to Busser Co. for the purchase of office supplies on account.
5. A check drawn for $415 had been incorrectly charged by the bank as $145.
6. Bank service charges for February amounted to $20.

1. Prepare a bank reconciliation.

2. Journalize the necessary entries. The accounts have not been closed. If a box does not require an entry, leave it blank.

Explanation / Answer

Balance as per Bank statement $13,333 Add: Cash deposit in transit $4,500 $17,833 Less: Checks outstanding $4,118 Check issued for 415 Charged as 145 $ 270 Adjusted Bank Balance $13,445 ====== Balance as per cash $7,635 Add: Note collected 5,000 Interest on note 200 $5,200 Check returned $630 13,465 Less: Bank charges $20 13,445 ===== JOURNAL ENTRIRS Cash $5200 Note receivable $5,000 Interest revenue $ 200 Bank Charges $20 Cash $20 Cash $630 Accounts Payable $630

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