Question

The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $84,457. The bank statement indicated a balance of $127,190 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 $33,310.
B.	A deposit of $17,610, representing receipts of June 30, had been made too late to appear on the bank statement.
C.	The bank collected $28,248 on a $26,400 note, including interest of $1,848.
D.	A check for $1,100 returned with the statement had been incorrectly recorded by Pala Medical Co. as $110. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.
E.	A check drawn for $680 had been erroneously charged by the bank as $860.
F.	Bank service charges for June amounted to $45.

	Instructions
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.
2.	Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles.
3.	If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?

Answer 1

Solution:

1)

Cash balance per bank statement		127,190
Adjustments:
Add: Deposit made on June 30, not recorded by bank	17,610
Add: Bank error in charging cheques as instead of	180
Deduct: Outstanding cheques	-33,310
Total adjustments		-15,520
Adjusted balance		111,670
Cash balance per company's record		84,457
Adjustments:
Add: Proceeds of notes collected by bank (interest included)	28,248
Deduct: Error in recording cheques	-990
Deduct: Bank service charges	-45
Total adjustments		27,213
Adjusted balance		111,670

2)

Particulars	Debit	Credit
Cash	28,248
Notes receivable		26,400
Interest revenue		1,848
Accounts Payable	990
Miscellaneous Expense	45
Cash		1035

3) On June 30, 20Y1 the balance sheet were prepared for Pala Medical Co. the reported amount as cash would be $111,670