The cash account for Collegiate Sports Co. on November 1 indicated a balance of $81,145. During November, the total cash deposited was $293,150, and checks written totaled $307,360. The bank statement indicated a balance of $112,675 on November 30. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
a. Checks outstanding totaled $41,840.
b. A deposit of $12,200, representing receipts of November 30, had been made too late to appear on the bank statement.
c. A check for $7,250 had been incorrectly charged by the bank as $2,750.
d. A check for $760 returned with the statement had been recorded by Collegiate Sports Co. as $7,600. The check was for the payment of an obligation to Ramirez Co. on account.
e. The bank had collected for Collegiate Sports Co. $7,385 on a note left for collection. The face of the note was $7,000.
f. Bank service charges for November amounted to $125.
g. A check for $2,500 from Hallen Academy was returned by the bank because of insufficient funds.
Instructions
1. Prepare a bank reconciliation as of November 30.
2. Journalize the necessary entries. The accounts have not been closed.
3. If a balance sheet is prepared for Collegiate Sports Co. on November 30, what amount should be reported as cash?
Answer:
1.
Cash balance according to bank statement$112,675
Add deposit of November 30, not recorded by bank 12,200
Deduct: Outstanding checks$41,840
Bank error in charging check as $2,750 instead
of $7,2504,500 46,340
Adjusted balance$ 78,535
Cash balance according to company’s records*$ 66,935
Add: Note and interest collected by bank $ 7,385
Error in recording check as $7,600 instead of $760 6,840 14,225
Deduct: Check returned because of insufficient funds $ 2,500
Bank service charges125 2,625
Adjusted balance$ 78,535
* Cash balance, November 1................................................... $ 81,145
Plus cash deposited in November....................................... 293,150
Less checks written in November.......................................... (307,360)
Balance per company’s records, November 30........................ $ 66,935
2.
Nov. 30 Cash14,225
Notes Receivable7,000
Interest Revenue385
Accounts Payable—Ramirez Co.6,840
30 Accounts Receivable—Hallen Academy 2,500
Miscellaneous Expense125
Cash2,625
3. $78,535; the adjusted balance from the bank reconciliation should be reported
as cash on the November 30 balance sheet for Collegiate Sports Co.