Question

Bank Reconciliation and Entries The cash account for American Medical Co. at April 30 indicated a balance of $10,205. The bank statement indicated a balance of $11,690 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: a. Checks outstanding totaled $4,210. b. A deposit of $4,380, representing receipts of April 30, had been made too late to appear on the bank statement. c. The bank collected $2,280 on a $2,160 note, including interest of $120. d. A check for $550 returned with the statement had been incorrectly recorded by American Medical Co. as $500. The check was for the payment of an obligation to Targhee Supply Co. for a purchase on account. e. A check drawn for $60 had been erroneously charged by the bank as $600. f. Bank service charges for April amounted to $35. Required: 1. Prepare a bank reconciliation. American Medical Co. Bank Reconciliation April 30 Cash balance according to bank statement Adjusted balance Cash balance according to company's records Adjusted balance 2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank. a. April 30 b. April 30

Answer 1

		Bank reconcilation
	Balance as per bank					11,690
	Add:
	Deposit in transit				4,380
	Erroneously charged by bank				540	4,920
						16,610
	less:
	Checks outstanding					4,210
	Adjusted balance as per bank					12,400
	Balance as per books					10,205
	Add:
	Note collected					2,280
						12,485
	less:
	Error in recording				50
	Bank service charge				35	85
	Adjusted cash balance					12,400
2)	Entries
	Accounting titles & explanation				Debit	Credit
	Cash				2,280
	note receivable					2,160
	interest income					120
	miscellaneous expense				35
	accounts payable				50
	cash					85