El Gato Painting Company maintains a checking account at American Bank. Bank sta

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:

     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 $520 was correctly recorded by the bank but was incorrectly recorded on the books as a $250 disbursement for advertising expense. Included in the bank’s deposits is a $2,700 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.

Prepare a bank reconciliation for the El Gato checking account at December 31, 2016.

2.

Prepare any necessary adjusting journal entries indicated. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

  

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:

Explanation / Answer

SOLUTION

(A) Bank Reconciliation statement-

(1) Deposits outstanding-

(2) Outstanding checks-

(B) Journal Entry-

Particulars Amount ($) Particulars Amount ($) Balance per bank statement 3,837 Balance per books 4,756 Add: Deposits outstanding (1) 3,690 Deduct: Deduct:   Error in recording check #411 ($520-$250) (270)   Bank error - deposit incorrectly credited to company account (2,700)   Service charges (36)   Outstanding checks (2) (957)   NSF checks (580) Corrected cash balance 3,870 Corrected book balance 3,870

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