Question

Rick Hall owns a card shop, Hall’s Cards. The following cash information is available for the month of August 2018:

As of August 31, the bank statement shows a balance of $12,160. The August 31 unadjusted balance in the Cash account of Hall’s Cards is $8,275. A review of the bank statement revealed the following information:

1. A deposit of $1,350 on August 31, 2018, does not appear on the August bank statement.
2. It was discovered that a check to pay for baseball cards was correctly written and paid by the bank for $2,240 but was recorded on the books as $3,140.
3. When checks written during the month were compared with those paid by the bank, three checks amounting to $4,385 were found to be outstanding.
4. A debit memo for $50 was included in the bank statement for the purchase of a new supply of checks.

Answer 1

	1)	Bank Reconciliation
		Unadjusted bank balance					12,160
		Add:	Deposit in transit				1,350
							13,510
		less:	Checks outstanding				4,385
		Adjusted bank balance					9,125
		Unadjusted cash balance					8,275
		Add:	Error in recording				900
							9,175
		less:	printing charges				50
		Adjusted cash balance					9125
	2)	Journal Entries
		Account titles & explanations				Debit	Credit
		Accounts payable				900
		cash					900
		printing charges				50
		cash					50

Answer 2

Rick Hall owns a card shop, Hall’s Cards. The following cash information is available for the month of August, Year 3.

As of August 31, the bank statement shows a balance of $11,685. The August 31 unadjusted balance in the Cash account of Hall’s Cards is $8,139. A review of the bank statement revealed the following information:

 

1. A deposit of $1,850 on August 31, Year 3, does not appear on the August bank statement.

2. It was discovered that a check to pay for baseball cards was correctly written and paid by the bank for $3,900 but was recorded on the books as $4,800.

3. When checks written during the month were compared with those paid by the bank, three checks amounting to $4,585 were found to be outstanding.

4. A debit memo for $89 was included in the bank statement for the purchase of a new supply of checks