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Bank reconciliation and entries The cash account for Collegiate Sports Co. on November 1, 20Y9, indicated a balance of $81,145. During November, the total cash deposited was $293,150, and checks written totaled $307,360. The bank statement indicated a balance of $112,675 on November 30, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: A. Checks outstanding totaled $41,840. B. A deposit of $12,200, representing receipts of November 30, had been made too late to appear on the bank statement. C. A check for $7,250 had been incorrectly charged by the bank as $2,750. D. A check for $760 returned with the statement had been recorded by Collegiate Sports Co. as $7,600. The check was for the payment of an obligation to Ramirez Co. on account. E. The bank had collected for Collegiate Sports Co. $7,385 on a note left for collection. The face of the note was $7,000. F. Bank service charges for November amounted to $125. G. A check for $2,500 from Hallen Academy was returned by the bank because of insufficient funds. Instructions 1. Prepare a bank reconciliation as of November 30, 20Y9. 2. Journalize the necessary entries. 3. If a balance sheet were prepared for Collegiate Sports Co. on November 30, 20Y9, what amount should be reported as cash?

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 7, Problem 4PB
Textbook Problem
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Bank reconciliation and entries

The cash account for Collegiate Sports Co. on November 1, 20Y9, indicated a balance of $81,145. During November, the total cash deposited was $293,150, and checks written totaled $307,360. The bank statement indicated a balance of $112,675 on November 30, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

  1. A. Checks outstanding totaled $41,840.
  2. B. A deposit of $12,200, representing receipts of November 30, had been made too late to appear on the bank statement.
  3. C. A check for $7,250 had been incorrectly charged by the bank as $2,750.
  4. D. A check for $760 returned with the statement had been recorded by Collegiate Sports Co. as $7,600. The check was for the payment of an obligation to Ramirez Co. on account.
  5. E. The bank had collected for Collegiate Sports Co. $7,385 on a note left for collection. The face of the note was $7,000.
  6. F.  Bank service charges for November amounted to $125.
  7. G. A check for $2,500 from Hallen Academy was returned by the bank because of insufficient funds.

Instructions

  1. 1. Prepare a bank reconciliation as of November 30, 20Y9.
  2. 2. Journalize the necessary entries.
  3. 3. If a balance sheet were prepared for Collegiate Sports Co. on November 30, 20Y9, what amount should be reported as cash?

(a)

To determine

Prepare bank reconciliation of Company CS as at November 30.

Explanation of Solution

Bank reconciliation: Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

The adjusted cash balance per bank, and the adjusted cash balance per books of Company CS is $78,535.

Prepare bank reconciliation of Company CS as at November 30.

Company CS
Bank Reconciliation
November 30
ParticularsAmount ($)Amount ($)
Cash balance as per bank statement 112,675
Add:   
Deposit of May 31, not recorded by bank 12,200
Less:  
Outstanding checks 41,840 
Bank error in charging check as $2,750 instead of $7,2504,50046,340
Adjusted cash balance per bank 78,535
   
Cash balance as per books 66,935
Add:   
Notes and interest receivable collected by bank7,385 
Error in recording check as $7,600 instead of $7606,84014,225
Less:   
Checks returned because of insufficient funds 2,500 
Banks service charges 1252,625
Adjusted cash balance per books 78,535

Table (1)

Working Note 1: Determine the balance per company’s book, November, 1...

(b)

To determine

Prepare adjusting journal entries for Company CS.

(c)

To determine

Report the amount of cash in the balance sheet on November 30.

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Financial And Managerial Accounting
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