The cash account for Santiago Co. on May 31, 2009 indicated a balance of SI 5,51

Question

The cash account for Santiago Co. on May 31, 2009 indicated a balance of SI 5,515. The May bank Matemen indicated an ending balance of $20,245. Comparing the bank statement, the canceled checks, and t ic accompanying memos with the records revealed the following reconciling items: Checks outstanding totaled $4,820. A deposit of $3.796 had been made too late to appear on the bank statement. A check for $1, 233 retuned with the statement had been incorrectly recorded as $233. The check was originally credited to accounts payable. The bank collected $5,541 on a note left for collection. The payment consisted of $5,000 of principal and $541 of interest income. Bank service charges for May amounted to $45. A check foe $790 was returned by the bank because of insufficient funds. Prepare a bank reconciliation as of May 31. 2009. Please use the attached bank reconciliation worksheet. Journalize the necessary entries.

Explanation / Answer

Santiago Co. All Amounts in $ 1) Bank Reconciliation Statement as on May 31, 2009 Bank Balance per books as on May 31, 2009 15515 Add : Cheques issued not presented 4820 Add : Collection by bank (Principal + Interest) 5541 Add : Cheque returned for insufficient funds 0 10361 25876 Less : Cheques deposited not cleared in bank 3796 Less : Bank Service Charges 45 Less : Cheque returned by bank, short accounted 1000 Less : Cheque returned by bank for insufficient funds 790 5631 Balance per Bank Statement as on May 31, 2009 20245 2) Journal Entries Accounts Payable A/c 1000 To Bank A/c 1000 Bank A/c 5541 To Note A/c 5000 To Interest on Note A/c 541 Bank Charges A/c 45 To Bank A/c 45 Accounts Receivable A/c 790 To Bank A/c 790

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