Bank Reconciliation

The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6:

0. Cash balance according to the company’s records at August 31, $27,350.

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1. Cash balance according to the bank statement at August 31, $28,760.

2. Checks outstanding, $5,550.

3. Deposit in transit not recorded by bank, $4,460.

4. A check for $480 in payment of an account was erroneously recorded in the check register as $840.

5. Bank debit memo for service charges, $40.

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

a. Prepare a bank reconciliation, using the format shown in  Exhibit 13 .

The drop down arrow has the name of the accounts.

Creative Design Co. Bank Reconciliation August 31, 20Y6
 
Line Item Description Amount
Cash balance according to bank statement $fill in the blank 2
  fill in the blank 4
  fill in the blank 6
Adjusted balance $fill in the blank 7
Cash balance according to company’s records $fill in the blank 8
  fill in the blank 10
  fill in the blank 12
Adjusted balance $fill in the blank 13

b.  If the balance sheet were prepared for Creative Design Co. on August 31, what amount should be reported for cash? fill in the blank 1 of 1$

c.  Must a bank reconciliation always balance (reconcile)?

Bank reconciliation and entries

The cash account for Stone Systems at July 31, 20Y5, indicated a balance of $17,750. The bank statement indicated a balance of $33,650 on July 31, 20Y5. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:

a. Checks outstanding totaled $17,865.

b. A deposit of $9,150, representing receipts of July 31, had been made too late to appear on the bank statement.

c. The bank had collected $6,095 on a note left for collection. The face of the note was $5,750.

d. A check for $390 returned with the statement had been incorrectly recorded by Stone Systems as $930. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account.

e. A check drawn for $1,810 had been incorrectly charged by the bank as $1,180.

f. Bank service charges for July amounted to $80.

Required:

Question Content Area

1.  Prepare a bank reconciliation.

Stone Systems Bank Reconciliation July 31, 20Y5
Line Item Description Amount Amount
Cash balance according to bank statement blank $Cash balance according to bank statement
  blank – Select –
  $- Select –  
  – Select – blank
Total deductions blank Total deductions
Adjusted balance blank $Adjusted balance
Cash balance according to company’s records blank $Cash balance according to company’s records
Adjustments: blank blank
  $- Select –  
  – Select – blank
Total additions blank Total additions
  blank – Select –
Adjusted balance blank $Adjusted balance

Question Content Area

2.  Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. If an amount box does not require an entry, leave it blank.

Date Account Debit Credit
       
20Y5 July 31   – Select – – Select –
    – Select – – Select –
    – Select – – Select –
    – Select – – Select –
       
July 31   – Select – – Select –
    – Select – – Select –

Question Content Area

3.  If a balance sheet were prepared for Stone Systems on July 31, 20Y5, what amount should be reported as cash? fill in the blank 1 of 1$

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