Question

El Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at the end of each month. The November 30, 2021, reconciliation of the bank balance is as follows: $3,331 1,300 Balance per bank, November 30 Add: Deposits outstanding Less: Checks outstanding #363 #365 #380 #381 #382 Adjusted balance per bank, November 30 $ 133 211 96 440 (946) $3,685 The company's general ledger checking account showed the following for December: Balance, December 1 Receipts Disbursements Balance, December 31 $ 3,685 43,650 (42,853) $ 4,482 The December bank statement contained the following information: Balance, December 1 Deposits Checks processed Service charges NSF checks Balance, December 31 $ 3,331 44,000 (42,918) (32) (540) $ 3,841

Answer 1

Solution 1:

El Gato Painting Company
Bank Reconciliation - December 31
Bank's Cash balance		Company's cash balance
Particulars	Amount	Particulars	Amount
Ending balance as per Bank Statements	$3,841.00	Ending Balance as per cash books	$4,482.00
Additions:		Additions:
Outstanding Deposit [$43,650 - ($44,000 - $1,300 - $2,300)]	$3,250.00
Deductions:		Deductions:
Outstanding Checks [$42,853 + $946 - ($42,918 + $180)]	$1,061.00	Incorrect recording of check 411	$180.00
Bank Error	$2,300.00	NSF check	$540.00
		Service Charge	$32.00
Up to date cash balance as per bank	$3,730.00	Up to date cash balance as per books	$3,730.00

Solution 2:

Journal Entries - El Gato Painting company
Date	Particulars	Debit	Credit
31-Dec	Advertising Expense Dr	$180.00
	To Cash		$180.00
	(Correction entry for check 411)
31-Dec	Accounts receivables Dr	$540.00
	To Cash		$540.00
	(To record NSF cehck from customer
31-Dec	Miscellenous Expenses Dr	$32.00
	To Cash		$32.00
	(Being service charges debited by bank)