El Gato Painting Company maintains a checking account at American Bank. Bank sta
ID: 2571171 • Letter: E
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, 2018, reconciliation of the bank balance is as follows:
The company’s general ledger checking account showed the following for December:
The December bank statement contained the following information:
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 $430 was correctly recorded by the bank but was incorrectly recorded on the books as a $340 disbursement for advertising expense. Included in the bank’s deposits is a $1,800 deposit incorrectly credited to the company’s account. The deposit should have been posted to the credit of the Los Gatos Company. The NSF checks have not been redeposited and the company will seek payment from the customers involved.
Required:
1. Prepare a bank reconciliation for the El Gato checking account at December 31, 2018.
2. Prepare any necessary adjusting journal entries indicated.
Explanation / Answer
SOLUTION
A. Bank reconciliation statement-
(1) Deposits outstanding-
2. Checks outstanding -
B. Adjusting journal entry-
Particulars Amount ($) Particulars Amount ($) Balance as per bank statement 3,846 Balance as per books 4,452 Add: Depoists outstanding (1) 2,700 Deduct: Error in recording check #411 (90) Deduct- Bank error (1,800) Service charges (27) Outstanding checks (2) (901) NSF checks (490) Adjusted bank balance 3,845 Adjusted book balance 3,845Related Questions
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