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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Exercise 4-45 Bank Reconciliation (Partial) OBJECTIVE

The cash account for Pin Corporation contains the following information for June:

Cash balance, 5131 $18,131] @

Cash received during June 42,651]

$60,789 5H0“ HE HOW

Cash disbursements during June:

Check 8255 $12,850

Check 8256 22,375

Check 8257 9,620

Check 8258 2,735 52,581

Cash balance, 6,130 $ 8,200

(Continued)

The bank statement for April contains the following information:

Bank balance. 5131 534,525

Add: Deposits during June 42,650

STE, 1‘1'5

Less: Checks paid during June:

Check 8253 $ 1.221]

Check 8254 14675

Check 8255 17.851]

Check 8256 22.375 56,620

Bank balance. 6.130 520,555

Required:

Assuming there were no deposits in transit at May 31 and that all outstanding checks at May 31 cleared during June, do the following:

Identify the outstanding checks at June 301

Prepare the reconciliation of the bank and cash account balances at June 30.

Identify the outstanding checks at May 31.

Prepare the reconciliation of the bank and cash account balances at May 31.

CONCEPTUAL CONNECTION Why could you not perform the bank reconciliations without knowing that there were no deposits in transit on May 31 and that all outstanding checks at May 31 cleared during June?

1.

To determine

The outstanding checks at the end of the June 30th.

Introduction:.Outstanding checks are those checks that are issued to accounts payable for repayment of the amount due to them but are not presented by them for collection. Outstanding checks are reduced and deposit in transit are added to the closing balance of the bank statement,to reconcile with balance represented in the cash book.

Explanation

Outstanding checks as on June 30th are listed as follows:

    ParticularsAmo...

2.

To determine

To prepare: Bank reconciliation.

Introduction:.Bank reconciliation is a process in which bank account prepared in the books of company is compared with the bank statement issued by bank. The difference in balance is then adjusted by recording appropriate adjusting entries.

3.

To determine

The outstanding checks at the end of the May 31st.

4.

To determine

To prepare: Bank reconciliation.

5.

To determine

To explain:The necessity of the information regarding outstanding checks and deposit in transit in preparation of bank reconciliation.

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