Question

Valentine Investigations has the following information for its cash account: Balance, 1/31 $ 7,420 Deposits during February 106,770 Checks written during February 102,310 Valentine's bank statement for February contained the following information: Valentine Investigations Bank Reconciliation Schedule February 28, 20XX 1 Balance per bank, 1/31 $8.914.00 2 Add: 3 February deposits 105,400.00 $114,314.00 5 Less: 6 Checks paid in February S(101,400.00) 7 Bank service charge (50.00) (800.00) (102,250.00) 8 Debit memo (electric bill) 9 Balance per bank, 2/28 $12,064.00 D Focus

Answer 1

1. Prepare the bank reconciliation as follows:
Valentine Investigations
Bank Reconciliation Schedule
February 28, 20XX
Cash balance from bank statement		12064
Add: Deposits in transit		4090
Less: Outstanding checks		-5124
Adjusted cash balance		11030
Cash balance from company records		11880
Less:
Bank service charge	-50
Debit memo (electric bill)	-800	-850
Adjusted cash balance		11030

2. Prepare the adjusting entry as follows:
Date	Account Title	Post Ref.	Debit	Credit
28-Feb	Bank service charge/Miscellaneous expense		50
	Cash			50
28-Feb	Utilities expense		800
	Cash			800

3. The amount of cash that should be reported on February 28 balance sheet is $11,030.