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	$	20,000	7/1	101	Insurance	$	4,800
7/15	Clinic receipts		2,000	7/2	102	Legal fees		1,500
7/22	Clinic receipts		2,300	7/7	DC	Advertising		300
7/30	Clinic receipts		4,000	7/8	103	Bikes		12,000
8/1	Borrowing		30,000	7/24	DC	Advertising		700
8/10	Clinic receipts		3,000	8/4	104	Kayaks		28,000
8/17	Clinic receipts		10,500	8/24	DC	Office supplies		1,800
9/21	Clinic receipts		13,200	9/1	105	Rent		2,400
10/17	Clinic receipts		17,900	12/8	106	Race permit		1,200
12/15	Race receipts		20,000	12/16	107	Salary		2,000
				12/31	108	Dividend		2,000
				12/31	109	Dividend		2,000
		$	122,900				$	58,700

     

Summary of Transactions

Beginning Cash Balance July 1, 2018	+	Deposits	−	Checks	=	Ending Cash Balance December 31, 2018
$0		$122,900		$58,700		$64,200

   

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		$103,400		11	$52,900	$50,500
Account Details
Deposits and Credits				Withdraws and Debits					Daily Balance
Date	Amount		Desc.	Date	No.	Amount		Desc.	Date	Amount
7/1	$	20,000	DEP	7/1	101	$	4,800	CHK	7/1	$	15,200
8/1		8,300	DEP	7/7	102		1,500	CHK	7/7		13,400
8/1		30,000	DEP	7/7			300	DC	7/14		1,400
9/1		13,500	DEP	7/14	103		12,000	CHK	7/24		700
9/30		200	INT	7/24			700	DC	8/1		39,000
10/1		13,200	DEP	8/9	104		28,000	CHK	8/9		11,000
11/1		17,900	DEP	8/24			1,800	DC	8/24		9,200
12/31		300	INT	9/2	105		2,400	CHK	9/1		22,700
				9/30			100	SF	9/2		20,300
				12/10	106		1,200	CHK	9/30		20,400
				12/31			100	SF	10/1		33,600
									11/1		51,500
									12/10		50,300
	$	103,400				$	52,900		12/31	$	50,500

  

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 $50,500 is substantially less than the company’s balance of $64,200.

2-a. Prepare Great Adventures’ bank reconciliation for the six-month period ended December 31, 2018. (Amounts to be deducted should be indicated with a minus sign. Total entries to the same account together when entering in the bank reconciliation.)
   

2-b. Record any necessary entries to adjust cash. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Total entries to the same account together when entering in the journal entry carousel.)

Answer 1

Bank Reconciliation Statement:
Bank balance as per bank statement				50500
Add:
Deposits in transit				20000
				70500
Less:
Outstanding checks				6000
Adjusted balance as per bank statement				64500
Balance as per books				64200
Add:
Interest earned				500
				64700
Less:
Service charges not debited				200
Adjusted balance as per books				64500
Journal entries:
S.no.	Accounts title and explanations				Debit $	Credit $
a.	Cash account Dr.				500
	Interest revenue					500
b.	Misc expenses Dr.				200
	Cash account					200