Question

An examination of the cash activities during the year shows the following.  
     

GREAT ADVENTURES Cash Account Records July 1, 2018, to December 31, 2018
Deposits				Checks/Debit Cards
Date	Desc.	Amount		Date	No.	Desc.	Amount
7/1	Stock sale	$	25,000	7/1	101	Insurance	$	5,640
7/15	Clinic receipts		2,000	7/2	102	Legal fees		1,850
7/22	Clinic receipts		1,840	7/7	DC	Advertising		370
7/30	Clinic receipts		5,500	7/8	103	Bikes		12,700
8/1	Borrowing		37,000	7/24	DC	Advertising		770
8/10	Clinic receipts		4,000	8/4	104	Kayaks		37,800
8/17	Clinic receipts		11,200	8/24	DC	Office supplies		1,870
9/21	Clinic receipts		13,900	9/1	105	Rent		3,240
10/17	Clinic receipts		18,600	12/8	106	Race permit		1,270
12/15	Race receipts		12,000	12/16	107	Salary		1,800
				12/31	108	Dividend		2,500
				12/31	109	Dividend		2,500
		$	131,040				$	72,310

  

Summary of Transactions

Beginning Cash Balance July 1, 2018	+	Deposits	−	Checks	=	Ending Cash Balance December 31, 2018
$0		$131,040		$72,310		$58,730

   

Suzie has not reconciled the company’s cash balance with that of the bank since the company was started. She asks Summit Bank to provide her with a six-month bank statement. To save time, Suzie makes deposits at the bank only on the first day of each month.
   

SUMMIT BANK                             Leading You to the Top									Member FDIC
Account Holder:			Great Adventures, Inc.				Account Number:     Statement Date:		1124537774 Dec. 31, 2018
Account Summary
Beginning Balance			Deposits and Credits				Withdraws and Debits		Ending Balance
July 1, 2018			No             Total				No         Total		December 31, 2018
$0			8		$119,440		11	$65,810	$53,630
Account Details
Deposits and Credits				Withdraws and Debits					Daily Balance
Date	Amount		Desc.	Date	No.	Amount		Desc.	Date	Amount
7/1	$	25,000	DEP	7/1	101	$	5,640	CHK	7/1	$	19,360
8/1		9,340	DEP	7/7	102		1,850	CHK	7/7		17,140
8/1		37,000	DEP	7/7			370	DC	7/14		4,440
9/1		15,200	DEP	7/14	103		12,700	CHK	7/24		3,670
9/30		300	INT	7/24			770	DC	8/1		50,010
10/1		13,900	DEP	8/9	104		37,800	CHK	8/9		12,210
11/1		18,600	DEP	8/24			1,870	DC	8/24		10,340
12/31		100	INT	9/2	105		3,240	CHK	9/1		25,540
				9/30			150	SF	9/2		22,300
				12/10	106		1,270	CHK	9/30		22,450
				12/31			150	SF	10/1		36,350
									11/1		54,950
									12/10		53,680
	$	119,440				$	65,810		12/31	$	53,630

  

Desc.	DEP Customer deposit	INT Interest earned	SF Service fees
	CHK Customer check	DC Debit card

  
After comparing the two balances, Suzie has some concern because the bank’s balance of $53,630 is substantially less than the company’s balance of $58,730.

1. Prepare Great Adventures’ bank reconciliation for the six-month period ended December 31, 2018.

2. Record any necessary entries to adjust cash.

Answer 1

1

Bank reconciliation:

Bank balance			Cash balance
Particulars	Amount		Particulars	Amount
Balance as per statement	53630		Balance as per books	58730
Add deposits in transit	12000		Add interest	100
Less checks in transit	6800		Less service fee	300
Correct balance	58830		Correct balance	58530

Rece receipt is not deposited and 107,108,109 checks are in transit.

2

Entry:

Account	Debit	Credit
Interest revenue		100
Service fee	300
Cash		200