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The bank reconciliation summary shows deposits in transit of $3,800, outstanding checks of $1,550, and cash on hand of $310. The bookkeeper incorrectly recorded a check for $146.50 that was actually for $164.50. The bank reconciliation is prepared showing a correct cash balance of $10,649. Entries are made to record the collection of a note and interest, pay bank charges, and correct the error in the supplies check amount. The $10,649 cash balance should be reported in the August 31 balance sheet.

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Muhammad Syafiq Ramadhan
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3K views2 pages

E7 25

The bank reconciliation summary shows deposits in transit of $3,800, outstanding checks of $1,550, and cash on hand of $310. The bookkeeper incorrectly recorded a check for $146.50 that was actually for $164.50. The bank reconciliation is prepared showing a correct cash balance of $10,649. Entries are made to record the collection of a note and interest, pay bank charges, and correct the error in the supplies check amount. The $10,649 cash balance should be reported in the August 31 balance sheet.

Uploaded by

Muhammad Syafiq Ramadhan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Q:

Aragon Company has just received the August 31, 2012, bank statement, which is summarized
below.

Deposits in transit at August 31 are $3,800, and checks outstanding at August 31 total $1,550.
Cash on hand at August 31 is $310. The bookkeeper improperly entered one check in the books
at $146.50 which was written for $164.50 for supplies (expense); it cleared the bank during the
month of August.
Instructions
(a) Prepare a bank reconciliation dated August 31, 2012, proceeding to a correct balance.
(b) Prepare any entries necessary to make the books correct and complete.
(c) What amount of cash should be reported in the August 31 balance sheet?

A:

(a) ARAGON COMPANY


Bank Reconciliation, August 31, 2012
County National Bank
Balance per bank statement, August 31, 2012............................... $ 8,089
Add: Cash on hand........................................................................ $ 310
Deposits in transit............................................................... 3,800 4,110
12,199
Deduct: Outstanding checks.......................................................... 1,550
Correct cash balance....................................................................... $10,649

Balance per books, August 31, 2012


($10,050 + $35,000 – $35,403)................................................... $ 9,647
Add: Note ($1,000) and interest ($40) collected........................... 1,040
10,687
Deduct: Bank service charges....................................................... $ 20
Understated check for supplies..................................... 18 38
Correct cash balance $10,649

(b) Cash.............................................................................................. 1,040


Notes Receivable................................................................ 1,000
Interest Revenue................................................................. 40
(To record collection of note and
interest)

Office Expense (Bank Charges)................................................... 20


Cash.................................................................................... 20
(To record August bank charges)

Supplies Expense.......................................................................... 18
Cash.................................................................................... 18
(To record error in recording check
for supplies)

(c) The corrected cash balance of $10,649 would be reported in the


August 31, 2012, balance sheet.

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