Question

Bank Reconciliation and Entries The cash account for Stone Systems at July 31, 20Y5, indicated a balance of $12,670. The bank statement indicated a balance of $16,000 on July 31, 20Y5. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items: Checks outstanding totaled $5,760. A deposit of $6,000, representing receipts of July 31, had been made too late to appear on the bank statement. The bank had collected $3,120 on a note left for collection. The face of the note was $2,960. A check for $600 returned with the statement had been incorrectly recorded by Stone Systems as $660. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account. A check drawn for $500 had been incorrectly charged by the bank as $50. Bank service charges for July amounted to $60. Required: 1. Prepare a bank reconciliation. Stone Systems Bank Reconciliation July 31, 20Y5 Cash balance according to bank statement $ 16,000 Add: Deposit in transit on July 31 6,000 Deduct: Outstanding checks $ 5,760 Deduct: Bank error in charging check as $50 instead of $500 450 Total deductions 6,210 Adjusted balance $ 15,790 Cash balance according to company's records $ Adjustments: Add: Note collected by bank, including $160 interest $ 3,120 Add: Error in recording check by Stone Systems 60 Total additions 3,180 Deduct: Bank service charges 60 Adjusted balance $ Feedback 1. Set up two sections: one for the company cash account section and the other for the bank balance section. Determine the effect of the data on each section. Recall that when you are finished, the adjusted balances in the bank and company sections of the reconciliation must be equal. If not, an item has been overlooked or treated in error. Recall that the company's cash account balance is updated for any items in the company section of the bank reconciliation.

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. If an amount box does not require an entry, leave it blank. 20Y5 July 31 Cash Notes Receivable Interest Revenue Accounts Payable-Holland Co. July 31 Miscellaneous Expense Cash

3. If a balance sheet were prepared for Stone Systems on July 31, 20Y5, what amount should be reported as cash? $

Answer 1

Answer-

Stone Systems
Bank Reconciliation
July 31, 20Y5
Cash balance according to bank statement		$16,000
Adjustments:
Deposit of July 31, not recorded by bank	$6,000
Bank error in charging check as $50 instead of $500	-$450
Outstanding checks	-$5,760
Total adjustments	-$210	-$210
Adjusted balance		$15,790
Cash balance according to company's records		$12,670
Adjustments:
Proceeds of note collected by bank, including $160 interest	$3,120
Error in recording check by Stone Systems (600-660)	$60
Bank service charges	-$60
Total adjustments	$3,120	$3,120
Adjusted balance		$15,790

2- Journal Entries

Date	Account Title	Debit ($)	Credit ($)
2015 July 31	Cash	3,180
	Notes Receivable		2,960
	Interest Revenue (3,120-2,960)		160
	Accounts Payable -Holland Co.		60
July 31	Miscellaneous expenses	60
	Cash		60

3-The Cash Balance that shall be reported in Balance Sheet $15,790.

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