You have been asked by Simmons Company to reconcile the cash account balance of $34,754 at 12/31/19. You have obtained the following information:
• The 12/31/19 bank statement shows a beginning balance of $38,783, receipts of $229,832, disbursements of $226,625, and an ending balance of $41,990.
• There were deposits of $11,450 on 11/30/19 that did not reach the bank until December. On 12/31/19, deposits of $10,900 were mailed to the bank.
• The list of outstanding checks totaled $29,831 at 11/30/19 and $33,450 at 12/31/19.
• On 11/15/19, the bank made an error charging Simmons for a $1,000 withdrawal that should have been deducted from the account of Simmands Company. Simmons has notified the bank and is waiting for the bank to correct the error.
• On 12/20/19, Simmons wrote a check for $415.30, but recorded it as $451.30. The check cleared the bank in December.
• Simmons’s 12/22/19 deposit for $11,930 was recorded in the books as $19,330.
• The bank statement showed that deposited checks totaling $6,520 were dishonored (NSF) during December.
• Interest on a bank loan for the month of December charged by the bank but not recorded on the books amounted to $355.
9. The bank charged Simmons a $75 service charge for
December.
Required:
• Prepare a bank reconciliation for Simmons, determining the correct cash balance.
• Prepare the journal entries required by Simmons at 12/31/19.
(c) What cash amount will appear on Simmons’s balance sheet at 12/31/19?
(a) | Simmons Company | ||
Bank Reconciliation | |||
December 31, 2019 | |||
Ending Cash Balance per Books | $34,754 | ||
Additions: | |||
Company's Error | $36 | ||
$34,790 | |||
Deductions: | |||
Company's Error | $7,400 | ||
NSF Check | $6,520 | ||
Interest on bank loan | $355 | ||
Service Charges | $75 | $14,350 | |
Correct cash balance | $20,440 | ||
Ending Cash Balance per Bank | $41,990 | ||
Additions: | |||
Deposits in transit | $10,900 | ||
Bank Error | $1,000 | $11,900 | |
$53,890 | |||
Deductions: | |||
Outstanding checks | $33,450 | ||
Correct cash balance | $20,440 | ||
(b) | |||
Date | Account Titles and Explanation | Debit | Credit |
Dec 31, 2019 | Accounts Receivable | $6,520 | |
Cash | $6,520 | ||
(To record NSF Check) | |||
Interest Expense | $355 | ||
Cash | $355 | ||
(To record Interest Expense) | |||
Miscellaneous Expense | $75 | ||
Cash | $75 | ||
(To record Miscellaneous Expense) | |||
(c) | Cash amount will appear on Simmons’s balance sheet at 12/31/19 :- $20,440 | ||
You have been asked by Simmons Company to reconcile the cash account balance of $34,754 at...
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