Question

Problem 1 The cash account of Aguilar Co. showed a ledger balance of $3,969.85 on June 30, 2017. The bank statement as of that date showed a balance of $4,150. Upon comparing the statement with the cash records, the following facts were determined. 1. There were bank service charges for June of $25. 2. A bank memo stated that Bao Dai's note for $1,200 and interest of $36 had been collected on June 29, and the bank had made a charge of $5.50 on the collection. (No entry had been made on Aguilar's books when Bao Dai's note was sent to the bank for collection.) 3. Receipts for June 30 for $3,390 were not deposited until July 4. Checks outstanding on June 30 totaled $2,136.05. 5. The bank had charged the Aguilar Co.'s account for a customer's uncollectible check amounting to $253.20 on June 29. 6. A customer's check for $90 (as payment on the customer's Accounts Receivable) had been entered as $60 in the cash receipts journal by Aguilar on June 15. 7. Check no. 742 in the amount of $491 had been entered in the cash journal as $ 419, and check no. 747 in the amount of $58.20 had been entered as $582. Both checks had been issued to pay for purchases and were payments on Aguilar's Accounts Payable. Instructions (a) Prepare a bank reconciliation dated June 30, 2017, proceeding to a correct cash balance. (b) Prepare any entries necessary to make the books correct and complete.

Answer 1

Answer to Problem#1 (First question in the list): a) $3,969.85 Cash balance per bank Add: Deposits in transit Aquilar Co. Bank Reconciliation Statement June 30, 2017 $4,150.00 Cash balance per cash book $3,390.00 Add: Note collected by bank Add: Interest on note collected Add: Error in recording collection check $7,540.00 Add: Error in recording payment check $1,200.00 $36.00 $30.00 $523.80 [$90.00 - $60.00] ($582 - $58.20] $1,789.80 $5,759.65 Less: Outstanding Checks ($2,136.05) Less: Service charges for the month Service charges on note collected Uncollected check returned Error in recording payment check $25.00 $5.50 $253.20 $72.00 [$491.00 - $419.00] ($355.70) $5,403.95 Adjusted balance on the bank reconciliation $5,403.95 Adjusted balance on the bank reconciliation

b) Ajusting Entries: NOTE: | No. Adjusting entries in company's books are required to be passed only for those transactions which would affect company records' balance. In other words, transactions which would affect bank records shall not be recorded in company's books of accounts. So, outstanding checks and deposits in transit are not recorded in adjusting entries. 2) Account Titles and Explanation / Debit Credit Cash $1,230.50 Miscellaneous Expense $5.50 Note Receivable $1,200.00 Interest Revenue $36.00 (To record collection of note by bank) Miscellaneous Expense $25.00 Cash $25.00 (To record service charges for the month) Cash $30.00 Accounts Receivable |(To rectify error in recording collection of receivable) Accounts Receivable $253.20 Cash $253.20 (To record uncollected check returned) Accounts Payable $72.00 Cash $72.00 (To rectify error in recording payment on account) Cash $523.80 Accounts Payable $523.80 (To rectify error in recording payment on account) $30.00 5)