The cash account for Capstone Medical Co. at November 30, 2016, indicated a bala

Question

The cash account for Capstone Medical Co. at November 30, 2016, indicated a balance of $84,457. The bank statement indicated a balance of $127,190 on November 30, 2016. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

A. Checks outstanding totaled $33,310. B. A deposit of $17,610, representing receipts of November 30, had been made too late to appear on the bank statement. C. The bank collected $28,248 on a $26,400 note, including interest of $1,848. D. A check for $1,100 returned with the statement had been incorrectly recorded by Capstone Medical Co. as $110. The check was for the payment of an obligation to ABC Supply Co. for a purchase on account. E. A check drawn for $680 had been erroneously charged by the bank as $860. F. Bank service charges for November amounted to $45.

Explanation / Answer

Answer 1 Bank reconciliation statement as on November 30,2016 In $ Cash balance as per bank statement 127190 Deduct: Checks outstanding 33310 Note collected with Interest 28248 61558 Add : Check deposited but not cleared 17610 Check to ABC supply co.returned 990 Check drawn erroneously charged 180 Bank service charges 45 18825 Cash balance as per Cash book 84457 Answer 2 Journal Entries Sr.No Account Titles Debit Credit C Cash 28248 Note Receivable 26400 Interest on note 1848 (Note received with interest recorded) D Cash 990 ABC Supply Co. 990 (Check return wrongly recorded now corrected) F Bank service charges 45 Cash 45 (Bank service charges recorded) Answer 3 Cash to be reported in Balancesheet as on November 30,2016 In $ Cash balance - before correction 84457 (+) Note received with interest 28248 (+) Check return wrongly recorded now corrected 90 (-) Bank service charges 45 Cash balance to be reported in Balance sheet 112750

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