Question

You have been asked by Simmons Company to reconcile the cash account balance of $34,754 at 12/31/19. You have obtained the following information:

   •   The 12/31/19 bank statement shows a beginning balance of $38,783, receipts of $229,832, disbursements of $226,625, and an ending balance of $41,990.

   •   There were deposits of $11,450 on 11/30/19 that did not reach the bank until December. On 12/31/19, deposits of $10,900 were mailed to the bank.

   •   The list of outstanding checks totaled $29,831 at 11/30/19 and $33,450 at 12/31/19.

   •   On 11/15/19, the bank made an error charging Simmons for a $1,000 withdrawal that should have been deducted from the account of Simmands Company. Simmons has notified the bank and is waiting for the bank to correct the error.

   •   On 12/20/19, Simmons wrote a check for $415.30, but recorded it as $451.30. The check cleared the bank in December.

   •   Simmons’s 12/22/19 deposit for $11,930 was recorded in the books as $19,330.

   •   The bank statement showed that deposited checks totaling $6,520 were dishonored (NSF) during December.

   •   Interest on a bank loan for the month of December charged by the bank but not recorded on the books amounted to $355.

9. The bank charged Simmons a $75 service charge for December.
Required:

   •   Prepare a bank reconciliation for Simmons, determining the correct cash balance.

   •   Prepare the journal entries required by Simmons at 12/31/19.

(c) What cash amount will appear on Simmons’s balance sheet at 12/31/19?

Answer 1

(a)	Simmons Company
	Bank Reconciliation
	December 31, 2019
	Ending Cash Balance per Books		$34,754
	Additions:
	Company's Error		$36
			$34,790
	Deductions:
	Company's Error	$7,400
	NSF Check	$6,520
	Interest on bank loan	$355
	Service Charges	$75	$14,350
	Correct cash balance		$20,440
	Ending Cash Balance per Bank		$41,990
	Additions:
	Deposits in transit	$10,900
	Bank Error	$1,000	$11,900
			$53,890
	Deductions:
	Outstanding checks		$33,450
	Correct cash balance		$20,440
(b)
Date	Account Titles and Explanation	Debit	Credit
Dec 31, 2019	Accounts Receivable	$6,520
	Cash		$6,520
	(To record NSF Check)
	Interest Expense	$355
	Cash		$355
	(To record Interest Expense)
	Miscellaneous Expense	$75
	Cash		$75
	(To record Miscellaneous Expense)
(c)	Cash amount will appear on Simmons’s balance sheet at 12/31/19 :- $20,440