Question

The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $146,035. The bank statement indicated a balance of $181,965 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

A.	Checks outstanding totaled $16,445.
B.	A deposit of $9,900, representing receipts of June 30, had been made too late to appear on the bank statement.
C.	The bank collected $31,800 on a $30,000 note, including interest of $1,800.
D.	A check for $2,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $200. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.
E.	A check drawn for $170 had been erroneously charged by the bank as $710.
F.	Bank service charges for June amounted to $75.

1.	Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Pala Medical Co.

Bank Reconciliation

June 30, 20Y1

1	Cash balance according to bank statement
2	Adjustments:
3
4
5
6
7
8
9	Cash balance according to company’s records
10	Adjustments:
11
12
13
14
15

Answer 1

Solution

Pala Medical Co

1. Bank Reconciliation at June 30, 20Y1

	Pala Medical Co
	Bank Reconciliation
Cash Balance as per bank statement	$181,965
Add: deposits in transit	$9,900
Add: Bank error in charging check as $200 instead of $2,000	$1,800
		$11,700
		$193,665
Deduct outstanding checks	$16,445
Adjusted balance	$177,220
Cash balance as per company's records	$146,035
Add: collections	$31,800
Less: error in recording check	$540
Less: bank charges	$75	$615
Adjusted balance as per cash book	$177,220