Question

Frederick Clinic deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on June 30,2011, its cash account shows a $15,141 debit balance. Frederick Clinic's June 30 bank statement shows a $14,275 on deposit in the bank. a. Outstanding checks as of June 30 total $2,500 b. The June 30 bank statement included a $125 debit memorandum for bank services. c. Check No. 919, listed with the canceled checks was correctly drawn for $645 in payment of a utility bill on June 15. Frederick mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $654 d. The June 30 cash receipts of $3,250 were placed in the bank's night depository after banking hours and were not recorded on the June 30 bank statement Required: Prepare bank reconciliation for Frederick Clinic using the following information. Prepare the adjusting journal entries that Frederick Clinic must record as a result of the preparing the bank reconciliation. OOY

Answer 1

Answer (a):

Frederick Clinic Bank Reconciliation June 30 $14,275 Book balance of cash Add: $3,250 Error in crediting check of $645 recorded as $654 $15,141 Bank statement balance Add: Deposit in transit $9 Deduct: Outstanding checks Deduct: Bank service Charge $2,500 $125 Reconciled Balance $15,025 Reconciled Balance $15,025

Answer (b):

Date June.30 Accounting Title and Explanation Debit Credit Cash Utilities Expense I(to record correction for incorrect recording of check #919) $9 $9 $125 June.30 Miscellaneous Expense Cash (to record bank service charges) $125