Gray Corporation controls its cash by depositing receipts on a daily basis and making all disbursements by cheque.After all the posting for the month of August 2020 was completed, the cash balance in the general ledger accountat the end of the month was $10,475. The bank statement for the month end received from the First National Bankshowed the balance to be $18,000. The following data are available for the purpose of reconciling these balances:a. Cash receipts collected on August 31 amounting to $3,000 have been placed in the night depository anddo not appear on the bank statement.b. Bank memos previously not available to the company are included with the bank statement. A memo foran NSF cheque, originally received as payment for an account receivable of $3,000, is included. A memofor bank charges of $75 for the NSF cheque is also included. Another memo advises the company that$2,000 Note Receivable has been collected by the bank, ($1,950 deposit and a bank charge of $50). Thisrepresents the net proceeds of a collection the bank had made on behalf of the company on a $2,000note receivable.c. Cheques written during the month but not included with the bank statement are no. 1200, $1,500; no.1223, $2,000; no. 1260, $950; no. 1294, $3,500.d. Cheque no. 1222 is returned with the bank statement. The cheque was made for $6,500, the correctamount owing for office expense. The cheque was recorded in the company records in the amount of$5,600.e. Cheques outstanding at the end of July included cheques no. 1114 for $1,600 and no. 1116 for $1,250.Cheque no. 1116 cleared the August bank statement; cheque no. 1114 did not.Required:1. Prepare a bank reconciliation at August 31.2. Prepare the necessary adjusting journal entries required to make the cash account in the general ledgeragree with the adjusted cash balance on the July bank reconciliation.

Bank Reconciliation Statement is an account prepared to match the balances as per firm's cash book…

Answered: Required: 1. Prepare a bank…

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

Chapter6: Bank Accounts, Cash Funds, And Internal Controls

Section: Chapter Questions

Problem 1PA

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Complex Balance Sheet Presented below is the unaudited balance sheet as of December 31, 2019, prepared by Zeus Manufacturing Corporations bookkeeper. Your company has been engaged to perform an audit, during which you discover the following information: 1. Checks totaling 14,000 in payment of accounts payable were mailed on December 31, 2019, but were not recorded until 2020. Late in December 2019, the bank returned a customers 2,000 check marked NSF, but no entry was made. Cash includes 100,000 restricted for building purposes. 2. Included in accounts receivable is a 30,000 note due on December 31, 2022, from Zeuss president. 3. During 2019, Zeus purchased 500 shares of common stock of a major corporation that supplies Zeus with raw materials. Total cost of this stock was 51,300, and fair value on December 31, 2019, was 51,300. Zeus plans to hold these shares indefinitely. 4. Treasury stock was recorded at cost when Zeus purchased 200 of its own shares for 32 per share in May 2019. This amount is included in investments. 5. On December 31, 2019, Zeus borrowed 500,000 from a bank in exchange for a 10% note payable, manning December 31, 2024. Equal principal payments are due December 31 of each year beginning in 2020. This note is collateralized by a 250,000 tract of land acquired as a potential future building site, which is included in land. 6. The mortgage payable requires 50,000 principal payments, plus interest, at the end of each month. Payments were made on January 31 and February 28, 2020. The balance of this mortgage was due June 30, 2020. On March 1, 2020, prior to issuance of the audited financial statements, Zeus consummated a non-cancelable agreement with the lender to refinance this mortgage. The new terms require 100,000 annual principal payments, plus interest, on February 28 of each year, beginning in 2021. The final payment is due February 28, 2028. 7. The lawsuit liability will be paid in 2020. 8. Of the total deferred tax liability; 5,000 is considered a current liability. 9. The current income tax expense reported in Zeuss 2019 income statement was 61,200. 10. The company was authorized to issue 100,000 shares of 50 par value common stock.

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Required: 1. Prepare a bank reconciliation at August 31. 2. Prepare the necessary adjusting journal entries required to make the cash account in the general ledger agree with the adjusted cash balance on the July bank reconciliation.