Question

The cash account for American Medical Co. at April 30 indicated a balance of $334,985. The bank statement indicated a balance of $388,600 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 $61,280.

 B. A deposit of $42,500, representing receipts of April 30, had been made too late to appear on the bank statement 

 C. The bank collected $42.000 on a $40,000 note, including interest of $2,000.

 D. A check for $7,600 returned with the statement had been incorrectly recorded by American Medical Co as $760. The check was for the payment of an obligation to Targhee Supply Co. for a purchase on account.

 E. A check drawn for $240 had been erroneously charged by the bank as $420.

 F. Bank service charges for April amounted to $145.

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? 

Answer 1

American Medical Co. Bank Reconciliation April 30
Cash balance according to bank statement		388,600
Add deposit of April 30, not recorded by bank	42,500
Add bank error in charging check as $760 instead of $7600	6,840	49,340
		437,940
Deduct outstanding checks		61,280
Adjusted balance		376,660
Cash balance according to company's records		334,985
Add proceeds of note collected by bank, including $2000 interest		42,000
		376,985
Deduct error in recording check by American Medical Co. 420 instead of 240	180
Deduct bank service charges	145	325
Adjusted balance		376,660

S.no	General Journal	Debit	Credit
a	Cash	42000
	Notes Receivable		40000
	Interest Revenue		2000
b	Accounts Payable-Targhee supply Co.	180
	Miscellaneous Expense	145
	Cash		325
3	Reported cash	376,660