Question

Cornerstone Exercise 4-16 Bank Reconciliation Firebird Corp. prepares monthly bank reconciliations of its checking account balance....

Cornerstone Exercise 4-16
Bank Reconciliation

Firebird Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement for February 2019 indicated the following:

Balance, February 28, 2019 $87,392
Service charge for February 100
Interest earned during February 875
NSF check from Valerie Corp. (deposited by Firebird) 630
Note ($12,000) and interest ($350) collected from a customer of Firebird’s 12,350

An analysis of canceled checks and deposits and the records of Firebird Corp. revealed the following items:

Checking account balance per Firebird’s books $73,260
Outstanding checks as of February 28 6,440
Deposit in transit at February 28 4,785
Error in recording check 7853 issued by Firebird 18

The correct amount of check #7853 is $797. It was recorded as a cash disbursement of $779 by mistake. The check was issued to pay for merchandise purchases. The check appeared on the bank statement correctly.

Required:

1. Prepare a bank reconciliation schedule at February 28, 2019, in proper form.

Firebird Corp.
Bank Reconciliation
February 28, 2019
Cash balance from bank statement $
Add:
Less:
Adjusted cash balance $
Cash balance from company records $
Add:
$
Less:
$
Adjusted cash balance $

2. What is the amount of cash that should be reported on the February 28, 2019 balance sheet?
$

Homework Answers

Answer #1
Cash balance from bank statement 87,392
Add :
Deposits in transit 4785
Less :
Outstanding checks 6,440
Adjusted cash balance 85,737
Cash balance from company records 73,260
Add :
Interest earned 875
Note collected by bank 12,000
Interest on note 350
Less :
Error in recording check (797-779) 18
Service charge 100
NSF check 630
Adjusted cash balance 85,737

.

Amount of cash that should be reported

= 85,737

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