Question

The cash account of Metlock Co. showed a ledger balance of $9,426.84 on June 30, 2017. The bank statement as of that date showed a balance of $9,960.00. Upon comparing the statement with the cash records, the following facts were determined. 1. 3. 4. 5. 6. 7. There were bank service charges for June of $60.00. A bank memo stated that Bao Dai's note for $2,880.00 and interest of $86.40 had been collected on June 29, and the bank had made a charge of $13.20 on the collection. (No entry had been made on Metlock's books when Bao Dai's note was sent to the bank for collection.) Receipts for June 30 for $8,136.00 were not deposited until July 2. Checks outstanding on June 30 totaled $5,126.52. The bank had charged the Metlock Co.'s account for a customer's uncollectible check amounting to $607.68 on June 29. A customer's check for $216.00 (as payment on the customer's Accounts Receivable) had been entered as $144.00 in the cash receipts journal by Metlock on June 15. 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 $139.68 had been entered as $1,396.80. Both checks had been issued to pay for purchase of equipment and were payments on Metlock's Accounts Payable.

Answer 1

Bank Reconciliation

Cash balance, as per bank statement, June 30		9,960
Add: Deposit in transit		8,136
Less: Outstanding checks		- 5,126.52
Adjusted cash balance		$12,969.48
Balance as per Company's record, June 30		9,426.84
Add:
Correction of book error	1,257.12
Collection of note receivable	2,880
Interest revenue	86.40
		4,223.52
		13,650.36
Less:
Uncollectible check	- 607.68
Bank service charges	- 60
Collection charges	- 13.20
		- 680.88
Adjusted cash balance		$12,969.48

Correction of book error = 72 - 72 + 1,257.12

= $1,257.12

Please ask if you have any query related to the question. Thank you