Question

An examination of the cash activities during the year shows the following.  
     

GREAT ADVENTURES
Cash Account Records
July 1, 2021, to December 31, 2021
Cash Receipts					Cash Disbursements
Date	Desc.	Amount			Date	Check#	Desc.	Amount
7/1	Stock sale	$	30,000		7/1	101	Insurance	$	5,760
7/15	Clinic receipts		1,800		7/2	102	Legal fees		1,900
7/22	Clinic receipts		2,760		7/7	DC	Advertising		380
7/30	Clinic receipts		3,600		7/8	103	Bikes		12,800
8/1	Borrowing		38,000		7/24	DC	Advertising		780
8/10	Clinic receipts		5,100		8/4	104	Kayaks		39,200
8/17	Clinic receipts		11,900		8/24	DC	Office supplies		1,880
9/21	Clinic receipts		14,000		9/1	105	Rent		3,360
10/17	Clinic receipts		18,700		12/8	106	Race permit		1,280
12/15	Race receipts		30,000		12/16	107	Salary		2,000
					12/31	108	Dividend		3,000
					12/31	109	Dividend		3,000
		$	155,860					$	75,340

	Summary of Transactions
	Beginning												Ending
	Cash Balance												Cash Balance
	July 1, 2021			+	Cash Receipts			−	Cash Disbursements			=	December 31, 2021
	$	0			$	155,860			$	75,340			$	80,520

  

Suzie has not reconciled the company’s cash balance with that of the bank since the company was started. She asks Summit Bank to provide her with a six-month bank statement. To save time, Suzie makes deposits at the bank only on the first day of each month.
   

SUMMIT BANK

Member FDIC

Leading You to the Top

Account Holder:

Great Adventures, Inc.

Account Number:

1124537774

Statement Date:

Dec. 31, 2021

Account Summary

Beginning Balance

Deposits and Credits

Withdrawals and Debits

Ending Balance

July 1, 2021

No

Total

No

Total

December 31, 2021

$0

8

$126,160

11

$67,440

$58,720

Account Details

Deposits and Credits

Withdrawals and Debits

Daily Balance

Date

Amount

Desc.

Date

No.

Amount

Desc.

Date

Amount

7/1

$

30,000

DEP

7/1

101

$

5,760

CHK

7/1

$

24,240

8/1

8,160

DEP

7/7

102

1,900

CHK

7/7

21,960

8/1

38,000

DEP

7/7

380

DC

7/14

9,160

9/1

17,000

DEP

7/14

103

12,800

CHK

7/24

8,380

9/30

100

INT

7/24

780

DC

8/1

54,540

10/1

14,000

DEP

8/9

104

39,200

CHK

8/9

15,340

11/1

18,700

DEP

8/24

1,880

DC

8/24

13,460

12/31

200

INT

9/2

105

3,360

CHK

9/1

30,460

9/30

50

SF

9/2

27,100

12/10

106

1,280

CHK

9/30

27,150

12/31

50

SF

10/1

41,150

11/1

59,850

12/10

58,570

$

126,160

$

67,440

12/31

$

58,720

Desc.	DEP Customer deposit	INT Interest earned	SF Service fees
	CHK Customer check	DC Debit card

After comparing the two balances, Suzie has some concern because the bank’s balance of $58,720 is substantially less than the company’s balance of $80,520.

1. 2-a. Prepare Great Adventures’ bank reconciliation for the six-month period ended December 31, 2021. (Amounts to be deducted should be indicated with a minus sign. Total entries to the same account together when entering in the bank reconciliation.)

1. 2-b. Record any necessary entries to adjust cash. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Total entries to the same account together when entering in the journal entry carousel.)

Answer 1

Bank Reconciliation is a process of identifying the difference that exist between the company's bank balance as per bank statement supplied by bank and cash balance as per company's accounting records GREAT ADVENTURES Bank Reconciliation December 31, 2021 Particulars Bank Amount Amount Journal Entry Date December 31, 2021 Particulars Debit Credit Sr.No Balance December, 31 Add: $58,720 Cash $300 1 Interest Income $300 Deposit in Transit $30,000 (To record interest income) Bank Charges $88.720 December 31, 2021 $100 Deduct: $100 Cash (To Record bank service charges) Outstanding Check # 107 $2,000 $3,000 Outstanding Check # 108 $3,000 Outstanding Check # 109 ($8,000 Total Deduction Adjusted Bank Balance $80,720 Cash Balance December, 31 $80,520 Add: Interest [$100+$200] $300 $80,820 Deduct: Service Fee [$0+$50] Total Deduction $100 ($100) Adjusted Book Balance $80,720