Question

23-19 (Objective 23-3) You are auditing general cash for the Pittsburgh Supply Company for the fiscal year ended July 31, 2016. The client has not prepared the July 31 bank reconciliation. After a brief discussion with the owner, you agree to prepare the reconciliation, with assistance from one of Pittsburgh Supply's clerks. You obtain the following information: General Ledger Bank Statement Beginning balance 7/1/16 $ 6,400 $ 8,378 Deposits 25,474 Cash receipts journal 26,874 Checks cleared (25,307) Cash disbursements journal (23,171) July bank service charge (107) Note paid directly (6,400) NSF check (516) Ending balance 7/31/16 $ 10,103 $ 1,522 June 30 Bank Reconciliation Information in General Ledger and Bank Statement Balance per bank $8,378 Deposits in transit 600 Outstanding checks Balance per books $6,400 Additional information obtained is as follows: 1. Checks clearing that were outstanding on June 30 totaled $2,411. 2. Checks clearing that were recorded in the July disbursements journal totaled $21,120. 3. A check for $1,130 cleared the bank but had not been recorded in the cash disbursements journal. It was for an acquisition of inventory. Pittsburgh Supply uses the periodic-inventory method. 4. A check for $646 was charged to Pittsburgh Supply but had been written on a different company's bank account. 5. Deposits included $600 from June and $24,874 for July. 6. The bank charged Pittsburgh Supply's account for a nonsufficient funds check totaling $516. The credit manager concluded that the customer intentionally closed its account and the owner left the city. The check was turned over to a collection agency. 7. A note for $6,000, plus interest, was paid directly to the bank under an agreement signed four months ago. The note payable was recorded at $6,000 on Pittsburgh Supply's books. Requirement a. Prepare a bank reconciliation that shows both the unadjusted and adjusted balance per books. (If a box is not used in the table, leave the box empty; do not select a label or enter a zero.) 1) Why my following answers are wrong? 2) Please answer the unadjusted balance per books Bank Reconciliation, August 31, 2016 Balance per bank D 1522 Add: Deposits in transit 2000 Check erroneously charged to Pittsburgh Supply 646 2646 Deduct: Outstanding checks -2218 Balance per bank, adjusted

Answer 1

Bank Reconciliation, August 31, 2016 $1,522 Balance Per Bank Add: Deposits in Transit Checks erroneously charged to company $2,000 $646 $2,646 $4.168 Less: Outstanding Checks $2,218 $2.218 $1,950 Adjusted Balance per Bank $10.103 Balance Per Books Less: Bank Service Charge Note Payment: NSF Check Unrecorded Check $107 $6,400 $516 $1,130 $8.153 $1,950 Adjusted Balance per Books Workings: Outstanding Checks: Outstanding Checks Balance, June 30 July checks per the books July checks per the bank Erroneous check charge Unrecorded check Outstanding Checks Balance, July 31 $2.578 $23,171 -$25,307 $646 $1,130 $2,218 Deposit in transit: Deposit in transit Balance, June 30 July deposits per the books July deposits per the bank Deposit in transit Balance, July 31 $600 $26.874 -$25,474 $2,000