Question

Ace Lawn Care Module 4 Mini Practice Problem

In June, Jim commented to you that he could never figure out his bank statement, “it never matches the balance in my accounting records” he tells you. So you explain that a bank reconciliation is a tool used to balance the bank statement to the accounting books. He gives you his bank statement for June 2014 (see Instructions below). The general ledger shows a balance for the account cash of $19,319.00 on June 30, 2014 (see detail transactions under instruction below). Jim’s business only has one checking account and no other cash accounts.

Instructions to answer these questions

Using the bank statement and the general ledger, prepare bank reconciliation for Ace Lawn Care as of June 30, 2014. Record the necessary journal entries to adjust the books for the appropriate reconciling items. Start with the journal entries first

Cash balance per bank statement

Adjusted cash balance per bank

Cash balance per books

Adjusted cash balance per books

	GENERAL JOURNAL			Page
DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT

Answer 1

Cash balance as per bank statement	$19,234
Add: Deposit in transit	$425
	$19,659
Less: Outstanding check (1574, 1576, 1577)	-$387
Less: EFT#44	-$143
Adjusted cash balance as per bank	$19,129
Cash balance as per books	$19,319
Add: Interest earned	-$5.00
Less: NSF check	-$120
Less: Bank Service charge	-$35
Less: Error in recording check No 1570	-$40
Adjusted cash balance as per book	$19,129