Question

(Bank Reconciliation and Adjusting Entries) The cash account of Aguilar Co. showed a ledger balance of...

(Bank Reconciliation and Adjusting Entries) The cash account of Aguilar Co. showed a ledger balance of $3,076.20 on June 30, 2020. The bank statement as of that date showed a balance of $4,232.90. Upon comparing the statement with the cash records, the following facts were determined. 1. There were bank service charges for June of $65. 2. A bank memo stated that Bao Dai's note for $1,800 and interest revenue of $90 had been collected on June 29, and the bank had made a charge of $20.00 as fees for the collection. (No entry had been made on Aguilar's books when Bao Dai's note was sent to the bank for collection.) 3. Cash receipts for June 30 for $2,248.50 were not deposited until July 2. 4. Checks outstanding on June 30 totaled $1,785.80. 5. The bank had charged the Aguilar Co.'s account for a customer's uncollectible (NSF) check amounting to $175.60 on June 29. 6. A customer's check for $385 had been deposited correctly at the bank but entered as $355 in the cash receipts journal by Aguilar on June 15. 7. Check no. 742 correctly written in the amount of $870 had been entered in the cash journal as $780, and check no. 747 correctly written in the amount of $230.00 had been entered as $280.00. Both checks had been issued to pay for purchases of equipment which was entered into the ledger correctly on initial transaction. (HINT- Treat as two separate items on the reconciliation) Instructions (a) Prepare a bank reconciliation dated June 30, 2020, proceeding to a correct cash balance. (b) Prepare any entries necessary to make the general ledger correct and complete. *Assume sales related to deposit errors were on account. **Assume the check error related to Equipment purchase was on account, meaning the original entry to Equipment and Accounts Payable was correct.

Homework Answers

Answer #1
Balance per bank, June 30 4,232.90
Add: Deposits in transit 2,248.50
Deduct: Outstanding checks 1,785.80
Correct cash balance, June 30 4,695.60
Balance per books, June 30 3,076.20
Add: Error in recording deposit ($385 – $355) 30
Error on check no. 747 (280 -230) 50
Note collection ($1,800 + 90) 1,890.00
Deduct: NSF check 175.60
Error on check no. 742 ($870 – $780) 90
Bank service charges ($65 + $20) 85
Correct cash balance, June 30 4,695.60
DR CR
Cash 1,970
Accounts Receivable 30
Equipment 50
Notes Receivable 1,800
Interest Revenue 90
DR CR
Accounts Receivable 175.60
Equipment 90
Office Expense—Bank Charges 85
Cash 350.60
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