Textbook Problem

Bank reconciliation and entries

Sunshine Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of July 31, 20Y0, have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account.

CASH ACCOUNT:
Balance as of July 1	$9,578.00
CASH RECEIPTS FOR MONTH OF JULY	6,465.42
DUPLICATE DEPOSIT TICKETS:

Date and amount of each deposit in July:

CHECKS WRITTEN:

Number and amount of each check issued in July:

BANK RECONCILIATION FOR PRECEDING MONTH:

Sunshine Interiors Bank Reconciliation June 30,20Y0
Cash balance according to bank statement		$9,422.80
Adjustments:
Deposit of June 30 not recorded by bank	$780.80
Outstanding Check No. 580	(310.10)
Outstanding Check No. 602	(85.50)
Outstanding Check No. 612	(92.50)
Outstanding Check No. 613	(137.50)
Total adjustments		155.20
Adjusted balance		$9,578.00
Cash balance according to company’s records		$9,605.70
Adjustments:
Bank service charges		(27.70)
Adjusted balance		$9,578.00

Instructions

1. 1. Prepare a bank reconciliation as of July 31, 20Y0. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable.
2. 2. Journalize the necessary entries.
3. 3. What is the amount of cash that should appear on the balance sheet as of July 31, 20Y0?
4. 4. Assume that a canceled check for $180 has been incorrectly recorded by the bank as $1,800. Briefly explain how the error would be included in a bank reconciliation and how it should be corrected.