27th Edition
WARREN + 5 others
ISBN: 9781337272094




27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Bank reconciliation and entries

The cash account for Collegiate Sports Co. on November 1 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. 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.


1. Prepare a bank reconciliation as of November 30.

2. Journalize the necessary entries. The accounts have not been closed.

3. If a balance sheet is prepared for Collegiate Sports Co. on November 30, what amount should be reported as cash?

To determine


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.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To prepare: Bank reconciliation of Company CS as at November 30.


  • The deposits which are not recorded by the bank are referred to as deposits in transit. Since the deposits in transit are not reflected on the bank statement, the company should add deposits in transit to cash balance per bank, while preparation of bank reconciliation statement.
  • Outstanding checks are the checks that are issued by the company, but not yet paid by the bank. When the check is issued for payment, the company deducts the cash balance immediately. But the bank deducts only when the cash is paid for the issued check...


To determine

To prepare: Adjusting journal entries for Company CS


To determine

To report:  Amount of cash in the balance sheet on November 30.

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