Question

The bank statement and cash activity information for the month of November for Stella Inc. is provided below.

Washington Bank Statement Balance at 10/31/19: $48,351.65 Deposits Amount Date Amount Date 2-Nov 4-Nov 7-Nov 9-Nov 10-Nov 15-Nov 17-Nov 20-Nov 20-Nov 26-Nov 28-Nov Withdrawals Check Number 4002 4010 EFT 4018 4011 4019 4021 4023 $303.50 $874.50 $24,500.00 $890.00 $206.40 $2,033.30 $456.60 $539.00 $720.00 $27.00 $645.00 1-Nov 2-Nov 6-Nov 10-Nov 11-Nov 15-Nov 17-Nov 22-Nov 23-Nov 29-Nov 30-Nov (Interest) $4,554.00 $5,025.00 $15,005.00 $625.60 $155.00 $934.40 $1,300.00 $122.20 $325.25 $1,000.00 $105.00 4022 SC 4024 29-Nov 30-Nov 4025 NSF MTG $400.00 $1,500.00 $8,500.00 30-Nov

Your analysis of the bank statement and company records revealed the following additional information:

A. Outstanding checks at 10/31/19 per Stella Inc. were:

B. A monthly EFT deduction of $24,500.00 was made for an insurance payment.

C. Washington Bank deducted Stella Inc.’s monthly mortgage payment directly from Stella’s bank account for an amount of $8,500.00, of which interest is $900.00.

Required:

1. Determine the November 30th ending cash balance per the bank.
2. Determine the November 30th ending cash balance per the books.
3. Prepare the reconciliations from both the Stella’s books and the bank statement to the correct cash balance at November 30th. Assume any errors were made by the company.
4. Prepare the adjusting journal entries necessary at November 30th, 2019, and explain any discrepancies found that do not require an adjusting entry.

Answer 1

(b)	Stella Inc.
	Bank Reconciliation
	November 30, 2019
	Ending Cash Balance per Books		$42,599.40
	Additions:
	Company's Error	$900.00
	Interest	$105.00	$1,005.00
			$43,604.40
	Deductions:
	Mortgage Payment	$8,500.00
	NSF Check	$1,500.00
	Service Charges	$27.00
	Check No. 4021 not recorded	$456.60
	Company Error	$100.00	$10,583.60
	Correct cash balance		$33,020.80
	Ending Cash Balance per Bank		$35,907.80
	Additions:
	Deposits in transit		$1,120.30
			$37,028.10
	Deductions:
	Outstanding checks
	Check no. 4001	$123.90
	Check no. 4005	$158.40
	Check no. 4007	$642.70
	Check no. 4020	$982.80
	Check no. 4026	$890.80
	Check no. 4027	$1,208.70
			$4,007.30
(a)	Correct cash balance		$33,020.80
(d)
	Account Titles and Explanation	Debit	Credit
Date
	Accounts Receivable	$1,500
	Cash		$1,500
	(To record NSF Check)
	Bank Loan Payable	$7,600
	Interest Expense	$900
	Cash		$8,500
	(To record mortgage payment)
	Bank Charges	$27
	Cash		$27
	(To record Miscellaneous Expense)
	Cash	$105
	Interest Revenue		$105