PR 8-5A Bank Reconciliation and entries
Rocky Mountain Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of July 31 have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account.
BANK RECONCILIATION FOR PRECEDING MONTH (DATED JUNE 30):
Cash balance according to bank statement $9,422.80
Add: Deposit of June 30, not recorded by bank 780.80
$10,203.60
Deducting : Outstanding checks :
No. 580 $310.10
No. 602 85.50
No. 612 92.50
No. 613 137.50 625.60
Adjusted Balance $9,587.00
Cash balance according to company’s records $ 9,605.7
Deduct : Service Charges 27.70
Adjusted Balance $9,587.00
AND SO ON
1. Prepare a bank reconciliation as of July 31. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable.
2. Journalize the necessary entries. The accounts have not been closed.
3. What is the amount of cash that should appear on the balance sheet as of July 31?
4. Assume that a canceled check for $125 has been incorrectly recorded by the bank as $125. Briefly explain how the error would be included in a bank reconciliation and how it should be corrected.
Check: 1. Adjusted Balance: $11,178.59
Click here for the solution: Rocky Mountain Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours
