Question 8.IP: The bank statement for Urethane Company for June 30, 2011, i......
The bank statement for Urethane Company for June 30, 2011, indicates a balance of $9,143.11. All cash receipts are deposited each evening in a night depository, after banking hours. The accounting records indicate the following summary data for cash receipts and payments for June:
Cash balance as of June 1 $ 3,943.50
Total cash receipts for June 28,971.60
Total amount of checks issued in June 28,388.85
Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:
a. The bank had collected for Urethane Company $1,030 on a note left for collection. The face amount of the note was $1,000.
b. A deposit of $1,852.21, representing receipts of June 30, had been made too late to appear on the bank statement.
c. Checks outstanding totaled $5,265.27.
d. A check drawn for $139 had been incorrectly charged by the bank as $157.
e. A check for $30 returned with the statement had been recorded in the company’s records as $240. The check was for the payment of an obligation to Avery Equipment Company for the purchase of office supplies on account.
f. Bank service charges for June amounted to $18.20.
Instructions
1. Prepare a bank reconciliation for June.
2. Journalize the entries that should be made by Urethane Company.
1.
| Urethane Company Bank Reconciliation June 30, 2011 |
||
| Cash balance according to bank statement . . . . . . . . . . . . . . . . | $ 9,143.11 | |
| Add: Deposit of June 30 not recorded by bank . . . . . . . . . . . . . | $1,852.21 | |
| Bank error in charging check as $157 | ||
| instead of $139 . . . . . . . . . . . . . . . . . . . . . . . . . . . | \underline{18.00} | \underline{1,870.21} |
| $11,013.32 | ||
| Deduct: Outstanding checks . . . . . . . . . . . . . . . . . . . . . . . . . . . | \underline{5,265.27} | |
| Adjusted balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | \underline{\$ 5,748.05} | |
| Cash balance according to company’s records . . . . . . . . . . | $ 4,526.25* | |
| Add: Proceeds of note collected by bank, | ||
| including $30 interest . . . . . . . . . . . . . . . . . . . . . . . . . . | $1,030.00 | |
| Error in recording check . . . . . . . . . . . . . . . . . . . . . . . . | \underline{210.00} | \underline{1,240.00} |
| Deduct: Bank service charges . . . . . . . . . . . . . . . . . . . . . . . . . | \underline{18.20} | |
| Adjusted balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | \underline{\$ 5,748.05} | |
| *$3,943.50 + $28,971.60 – $28,388.85 | ||
2.
| June | 30 | Cash | 1,240.00 | ||
| Notes Receivable | 1,000.00 | ||||
| Interest Revenue | 30.00 | ||||
| Accounts Payable—Avery Equipment Company | 210.00 | ||||
| 30 | Miscellaneous Administrative Expense | 18.20 | |||
| Cash | 18.20 |