Question

Problem 7-14 (Algo) Bank reconciliation and adjusting entries [Appendix 7A] El Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at the end of each month. The November 30, 2021, reconciliation of the bank balance is as follows: Balance per bank, November 30 $ 3,371 Add: Deposits outstanding 1,340 Less: Checks outstanding #363 $ 137 #365 215 #380 70 #381 100 #382 230 (752 ) Adjusted balance per bank, November 30 $ 3,959 The company’s general ledger checking account showed the following for December: Balance, December 1 $ 3,959 Receipts 44,050 Disbursements (43,253 ) Balance, December 31 $ 4,756 The December bank statement contained the following information: Balance, December 1 $ 3,371 Deposits 44,400 Checks processed (43,318 ) Service charges (36 ) NSF checks (580 ) Balance, December 31 $ 3,837 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. Required: 1. Prepare a bank reconciliation for the El Gato checking account at December 31, 2021. 2. Prepare any necessary adjusting journal entries indicated.

Answer 1

Answer-a

Answer-b