Question

The cash account for American Medical Co. at April 30 indicated a balance of $89,775. The bank statement indicated a balance of $125,160 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

A.	Checks outstanding totaled $31,540.
B.	A deposit of $18,000, representing receipts of April 30, had been made too late to appear on the bank statement.
C.	The bank collected $24,075 on a $22,500 note, including interest of $1,575.
D.	A check for $1,700 returned with the statement had been incorrectly recorded by American Medical Co. as $170. The check was for the payment of an obligation to Targhee Supply Co. for a purchase on account.
E.	A check drawn for $290 had been erroneously charged by the bank as $920.
F.	Bank service charges for April amounted to $70.

	Instructions
1.	Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Deduct:” or “Add:” will automatically appear if it is required.
2.	Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles.
3.	If a balance sheet is prepared for American Medical Co. on April 30, what amount should be reported as cash?

CHART OF ACCOUNTSAmerican Medical Co.General Ledger

	ASSETS
110	Cash
111	Petty Cash
120	Accounts Receivable
131	Notes Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
181	Land
191	Office Equipment
192	Accumulated Depreciation-Office Equipment
193	Store Equipment
194	Accumulated Depreciation-Store Equipment

	LIABILITIES
211	Accounts Payable-Targhee Supply Co.
221	Notes Payable
222	Interest Payable
231	Salaries Payable
241	Sales Tax Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
515	Credit Card Expense
516	Cash Short and Over
520	Salaries Expense
531	Advertising Expense
532	Delivery Expense
533	Insurance Expense
534	Office Supplies Expense
535	Rent Expense
536	Repairs Expense
537	Selling Expenses
538	Store Supplies Expense
561	Depreciation Expense-Office Equipment
562	Depreciation Expense-Store Equipment
590	Miscellaneous Expense
710	Interest Expense

1. Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Deduct:” or “Add:” will automatically appear if it is required. Whenever there is more than one adjusting item in the bank portion of the reconciliation or the general ledger portion of the bank reconciliation, enter in the order presented in the instructions.

AMERICAN MEDICAL CO.

Bank Reconciliation

April 30

1	Cash balance according to bank statement
2
3
4
5
6	Adjusted balance
7
8	Cash balance according to company’s records
9
10
11
12
13	Adjusted balance

2. Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

3. If a balance sheet is prepared for American Medical Co. on April 30, what amount should be reported as cash?

Answer 1

1.

AMERICAN MEDICAL CO.

Bank Reconciliation

April 30

1	Cash balance according to bank statement		$125,160
2	Deposit in transit	18,000
3	Correction of bank error	630	18,630
4			143,790
5	Checks outstanding totaled		- $31,540
6	Adjusted balance		$112,250
7
8	Cash balance according to company’s records		$89,775
9	Bank collection of note and interest		24,075
10			113,850
11	Bank service charges	- 70
12	Correction of book error	- 1,530	- 1,600
13	Adjusted balance		$112,250

2.

Journal

April 30	Cash	24,075
	Note receivable		22,500
	Interest revenue		1,575
April 30	Accounts payable - Targhee Supply Co	1,530
	Cash		1,530
April 30	Bank service charges	70
	Cash		70

3.

Cash to be reported = $112,250

Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubt. Thanks.