Question

Problem 7-13

The cash account of Marigold Co. showed a ledger balance of $21,120.39 on June 30, 2017. The bank statement as of that date showed a balance of $22,410.00. Upon comparing the statement with the cash records, the following facts were determined.

1.		There were bank service charges for June of $135.00.
2.		A bank memo stated that Bao Dai’s note for $6,480.00 and interest of $194.40 had been collected on June 29, and the bank had made a charge of $29.70 on the collection. (No entry had been made on Marigold’s books when Bao Dai’s note was sent to the bank for collection.)
3.		Receipts for June 30 for $18,306.00 were not deposited until July 2.
4.		Checks outstanding on June 30 totaled $11,534.67.
5.		The bank had charged the Marigold Co.’s account for a customer’s uncollectible check amounting to $1,367.28 on June 29.
6.		A customer’s check for $486.00 (as payment on the customer’s Accounts Receivable) had been entered as $324.00 in the cash receipts journal by Marigold on June 15.
7.		Check no. 742 in the amount of $491.00 had been entered in the cash journal as $419.00, and check no. 747 in the amount of $314.28 had been entered as $3,142.80. Both checks had been issued to pay for purchase of equipment and were payments on Marigold’s Accounts Payable.

A. Prepare a bank reconciliation dated June 30, 2017, proceeding to a correct cash balance. (Enter answers to 2 decimal places, e.g. 125.62.)

B. Prepare entries necessary to make the books correct and complete. Use Office Expense account for bank service charges. (Enter answers to 2 decimal places, e.g. 125.62. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

Marigold Co
Bank Reconciliation
Jun-30
Balance per bank, June 30	$ 22,410.00
Add: Deposits in transit	$ 18,306.00
Deduct: Outstanding checks	$ 11,534.67
Correct cash balance, June 30	$ 29,181.33
Balance per books, June 30	$ 21,120.39
Add: Error in recording deposit ($486 – $324)	$      162.00
Error on check no. 747 [3142.80-314.28]	$   2,828.52
Note collection ($6480+194.40)	$   6,674.40
Deduct: NSF check	$   1,367.28
Error on check no. 742 ($491 – $419)	$        72.00
Bank service charges ($135+29.70)	$      164.70
Correct cash balance, June 30	$ 29,181.33
	DR
Cash	$   9,664.92
Accounts Receivable		$     162.00
Accounts Payable		$ 2,828.52
Notes Receivable		$ 6,480.00
Interest Revenue		$     194.40
	DR
Accounts Receivable	$   1,367.28
Accounts Payable	$        72.00
Office Expense—Bank Charges	$      164.70
Cash		$ 1,603.98