The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $166,436. The bank statement indicated a balance of $195,688 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:a.Checks outstanding totaled $19,427.b.A deposit of $12,300, representing receipts of June 30, had been made too late to appear on the bank statement.c.The bank collected $26,500 on a $25,000 note, including interest of $1,500.d.A check for $4,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $400. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.e.A check drawn for $195 had been erroneously charged by the bank as $915.f.Bank service charges for June amounted to $55. 1.Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Add:" & "Deduct:" will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.2.Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles.3.If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash? XChart of Accounts CHART OF ACCOUNTSPala Medical Co.General Ledger ASSETS110Cash111Petty Cash120Accounts Receivable131Notes Receivable141Merchandise Inventory145Office Supplies146Store Supplies151Prepaid Insurance181Land191Office Equipment192Accumulated Depreciation-Office Equipment193Store Equipment194Accumulated Depreciation-Store Equipment LIABILITIES211Accounts Payable-Skyline Supply Co.221Notes Payable222Interest Payable231Salaries Payable241Sales Tax Payable EQUITY310Common Stock311Retained Earnings312Dividends REVENUE410Sales610Interest Revenue EXPENSES510Cost of Merchandise Sold515Credit Card Expense516Cash Short and Over520Salaries Expense531Advertising Expense532Delivery Expense533Insurance Expense534Office Supplies Expense535Rent Expense536Repairs Expense537Selling Expenses538Store Supplies Expense561Depreciation Expense-Office Equipment562Depreciation Expense-Store Equipment590Miscellaneous Expense710Interest Expense XAmount Descriptions Amount Descriptions Adjusted balance Bank error in charging check as $915 instead of $195 Bank service charges Deposit in transit on June 30 Error in recording check Note collected by bank, including $1,500 interest Outstanding checks Total additions Total deductions XBank Reconciliation 1. Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Add:" & "Deduct:" will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Pala Medical Co.Bank ReconciliationJune 30, 20Y11Cash balance according to bank statement 2 3 4 5 6 7 8Cash balance according to company’s records 9 10 11 12 13 XJournal

Question

The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $166,436. The bank statement indicated a balance of $195,688 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:a.Checks outstanding totaled $19,427.b.A deposit of $12,300, representing receipts of June 30, had been made too late to appear on the bank statement.c.The bank collected $26,500 on a $25,000 note, including interest of $1,500.d.A check for $4,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $400. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.e.A check drawn for $195 had been erroneously charged by the bank as $915.f.Bank service charges for June amounted to $55. 1.Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. &#34;Add:&#34; & &#34;Deduct:&#34; will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.2.Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles.3.If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?    XChart of Accounts  CHART OF ACCOUNTSPala Medical Co.General Ledger ASSETS110Cash111Petty Cash120Accounts Receivable131Notes Receivable141Merchandise Inventory145Office Supplies146Store Supplies151Prepaid Insurance181Land191Office Equipment192Accumulated Depreciation-Office Equipment193Store Equipment194Accumulated Depreciation-Store Equipment LIABILITIES211Accounts Payable-Skyline Supply Co.221Notes Payable222Interest Payable231Salaries Payable241Sales Tax Payable EQUITY310Common Stock311Retained Earnings312Dividends REVENUE410Sales610Interest Revenue EXPENSES510Cost of Merchandise Sold515Credit Card Expense516Cash Short and Over520Salaries Expense531Advertising Expense532Delivery Expense533Insurance Expense534Office Supplies Expense535Rent Expense536Repairs Expense537Selling Expenses538Store Supplies Expense561Depreciation Expense-Office Equipment562Depreciation Expense-Store Equipment590Miscellaneous Expense710Interest Expense    XAmount Descriptions  Amount Descriptions Adjusted balance Bank error in charging check as $915 instead of $195 Bank service charges Deposit in transit on June 30 Error in recording check Note collected by bank, including $1,500 interest Outstanding checks Total additions Total deductions     XBank Reconciliation  1. Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. &#34;Add:&#34; & &#34;Deduct:&#34; will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Pala Medical Co.Bank ReconciliationJune 30, 20Y11Cash balance according to bank statement  2   3   4   5   6   7   8Cash balance according to company’s records  9   10   11   12   13         XJournal

Accepted Answer

Bank reconciliation statement is prepared by the business entity when they receive the bank…

a.	Checks outstanding totaled $19,427.
b.	A deposit of $12,300, representing receipts of June 30, had been made too late to appear on the bank statement.
c.	The bank collected $26,500 on a $25,000 note, including interest of $1,500.
d.	A check for $4,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $400. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.
e.	A check drawn for $195 had been erroneously charged by the bank as $915.
f.	Bank service charges for June amounted to $55.

1.	Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Add:" & "Deduct:" will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
2.	Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles.
3.	If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?

Amount Descriptions
Adjusted balance
Bank error in charging check as $915 instead of $195
Bank service charges
Deposit in transit on June 30
Error in recording check
Note collected by bank, including $1,500 interest
Outstanding checks
Total additions
Total deductions

1	Cash balance according to bank statement
2
3
4
5
6
7
8	Cash balance according to company’s records
9
10
11
12
13