Zimmerman Company of Shawnee, Kansas, spreads herbicides and applies liquid fert
ID: 2491500 • Letter: Z
Question
Zimmerman Company of Shawnee, Kansas, spreads herbicides and applies liquid fertilizer for local farmers. On May 31, 2014, the company’s Cash account per its general ledger showed a balance of $6,738.90.
The bank statement from Shawnee State Bank on that date showed the following balance.
SHAWNEE STATE BANK Checks and Debits Deposits and Credits Daily Balance XXX XXX 5-31 6,968.00
A comparison of the details on the bank statement with the details in the Cash account revealed the following facts.
1. The statement included a debit memo of $40.00 for the printing of additional company checks.
2. Cash sales of $883.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $933.15. The bank credited Zimmerman Company for the correct amount.
3. Outstanding checks at May 31 totaled $276.25, and deposits in transit were $1,880.15.
4. On May 18, the company issued check No. 1181 for $685 to M. Hartley, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Zimmerman Company for $658.
5. A $2,600.00 note receivable was collected by the bank for Zimmerman Company on May 31 plus $110.00 interest. The bank charged a collection fee of $20.00. No interest has been accrued on the note.
6. Included with the canceled checks was a check issued by Zinderberg Company to P. Conard for $360.00 that was incorrectly charged to Zimmerman Company by the bank.
7. On May 31, the bank statement showed an NSF charge of $380.00 for a check issued by Bev Sullivan, a customer, to Zimmerman Company on account.
A) Prepare a bank reconillation at May 31,2014.
B) Prepare the necessary adjusting entries for Zimmerman Company at May 31, 2014.
Explanation / Answer
Bank Reconciliation as on May 31,2014 cash Balance as per Bank Statement $6,968 Add: Deposit in Transit 1880.15 Bank Error Zinderberg Check 360 2240.15 Sub total Less: Outstanding checks 276.25 Adjusted cash balance as per bank 8931.9 Cash balance per books 6738.9 Add: collection of Note Receivable (2600+110-20) 2690 Sub total 9428.9 Less: NSF check 380 Error in May 12 deposit (933.15-883.15) 50 Error in recording check no.1181 (685-658) 27 Check printing charge 40 497 Adjusted cash Balance per books 8931.9 Adjusting Entries Dr Cr 31-May-14 Cash 2690 Miscelleneous Expenses 20 Notes Receivable 2600 Interest Revenue 110 (To record note collected) Accounts receiveble 380 Cash 380 (NSF check) Sales Revenue 50 Cash 50 (record erroe in deposit) Accounts Payable 27 cash 27 (record error on check) Miscelleneous Expenses 40 Cash 40 (recorf check printing charges) Miscelleneous Expenses taken as check printing charges ,interest charged are mis. In nature and these are small amount so taken under this heading
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