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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?

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. "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?

 

check_circleAnswer
Step 1

A bank reconciliation is a statement that shows the difference in the bank balance shown by the company’s bank account and the bank balance shown in company’s passbook. It is prepared to know the reason of difference and correction of the same.

Step 2

Bank reconciliation statement will be as follows:

P company
Bank reconciliation statement
June 30, 20Y1
Particulars
Amount
Amount
(S)
(S)
195,688
Cash balance as per bank statement
Adjustments
Add: Deposit made on June 30, not recorded by bank
Add: Bank error in charging cheques as $915 instead of $195
Deduct: Outstanding cheques
Total adjustments
Adjusted balance
12,300
720
| -19,427
-6.407
189 281
Cash balance according to company's record
Adjustments:
Add: Proceeds of notes collected by bank, including $1,500
interest
Deduct: Error in recording cheque
Deduct: Bank service charges
Total adjustments
Adjusted balance
166,436
26,500
-3,600
-55
22,845
189.281
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P company Bank reconciliation statement June 30, 20Y1 Particulars Amount Amount (S) (S) 195,688 Cash balance as per bank statement Adjustments Add: Deposit made on June 30, not recorded by bank Add: Bank error in charging cheques as $915 instead of $195 Deduct: Outstanding cheques Total adjustments Adjusted balance 12,300 720 | -19,427 -6.407 189 281 Cash balance according to company's record Adjustments: Add: Proceeds of notes collected by bank, including $1,500 interest Deduct: Error in recording cheque Deduct: Bank service charges Total adjustments Adjusted balance 166,436 26,500 -3,600 -55 22,845 189.281

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Step 3

Journal entries for the transact...

Journal entry
Date. Account title & explanation
June Cash
30
L.F Debit ($)
Credit (S)
26,500
20Υ1
.Notes receivable
Interest revenue
(to record collection of note & interest)
June Account payable
30,
20Υ1
25,000
1,500
3,600
Miscellaneous expense
.Cash
(to record return cheque and bank
charges)
55
3,655
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Journal entry Date. Account title & explanation June Cash 30 L.F Debit ($) Credit (S) 26,500 20Υ1 .Notes receivable Interest revenue (to record collection of note & interest) June Account payable 30, 20Υ1 25,000 1,500 3,600 Miscellaneous expense .Cash (to record return cheque and bank charges) 55 3,655

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