Question

1. On July 31, 2022, Teal Mountain Company had a cash balance per books of $6,285. The statement from Dakota State Bank on that date showed a balance of $7,835.80. A comparison of the bank statement with the Cash account revealed the following facts.

1.		The bank service charge for July was $17.
2.		The bank collected $1,665.00 for Teal Mountain Company through electronic funds transfer.
3.		The July 31 receipts of $1,346.30 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31.
4.		Company check No. 2480 issued to L. Taylor, a creditor, for $384 that cleared the bank in July was incorrectly entered in the cash payments record on July 10 for $348.
5.		Checks outstanding on July 31 totaled $2,005.10.
6.		On July 31, the bank statement showed an NSF charge of $720.00 for a check received by the company from W. Krueger, a customer, on account.

(a) Prepare the bank reconciliation as of July 31. (List items that increase balance as per bank & books first.)

2. The following information is available for Sage Hill Company for the month of January: expected cash receipts $57,490, expected cash disbursements $66,490, and cash balance on January 1, $12,420. Management wishes to maintain a minimum cash balance of $7,560.

Prepare a basic cash budget for the month of January.

Answer 1

Solution 1:

Solution 2:

Cash Budget - Teal Mountain company
Particulars	January
Opening Cash balance	$12,420.00
Add: Cash receipts	$57,490.00
Total Cash Available	$69,910.00
Less - Cash Disbursement	$66,490.00
Excess (deficiency) of cash available over disbursements	$3,420.00
Financing:
Borrowings	$4,140.00
Repayments	$0.00
Interest	$0.00
Total Financing	$4,140.00
Ending cash balance	$7,560.00