Bank Reconciliation and Entries Sunshine Interiors deposits all cash receipts ea

Question

Bank Reconciliation and Entries

Sunshine Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of July 31 have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account.

Click here to see JUNE BANK STATEMENT.

Required:

1. Prepare a bank reconciliation as of July 31. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable. When required, enter amounts in dollars and cents.

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. When required, enter amounts in dollars and cents. For a compound transaction, if an amount box does not require an entry, leave it blank.

BANK RECONCILIATION FOR PRECEDING MONTH (DATED JUNE 30): Cash balance according to bank statement $9,422.80 Add deposit of June 30, not recorded by bank 780.80 $10,203.60

Explanation / Answer

1. Prepare a bank reconciliation as of July 31. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable. When required, enter amounts in dollars and cents. Sunshine Interiors Bank Reconciliation July 31, 20Y5 Cash balance according to bank statement $11,601.41 Add deposit of July 31, not recorded by bank $1,177.87 $12,779.28 Deduct outstanding checks: # 613 $137.50 # 628 $837.70 # 633 $310.08 $1,285.28 Adjusted balance $11,494.00 Cash balance according to company's records $7,664.00 Add proceeds of note collected by bank Principal $4,000.00 Interest $160.00 Add error in recording July 23 deposit $18.00 Add error in recording Check No. 627 $63.00 $4,241.00 $11,905.00 Deduct: Check returned because of insufficient funds $375.00 Service charges $36.00 $411.00 Adjusted balance $11,494.00 * Balance per cash in bank account, July 1 $9,578.00 Add July receipts $6,465.42 Deduct July disbursements -$8,379.42 Balance per cash in bank account, July 31 $7,664.00 2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. When required, enter amounts in dollars and cents. For a compound transaction, if an amount box does not require an entry, leave it blank. a. 20Y5 July 31 Debit Credit Cash $4,241.00 Notes Receivables $4,000.00 Interest Revenue $160.00 Sales $18.00 Accounts Payable $63.00 b. July 31 Accounts Receivable $375.00 Miscellaneous Expense $36.00 Cash $411.00

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