Question

An examination of the cash activities during the year shows the following. GREAT ADVENTURES Cash Account Records July 1, 2021, to December 31, 2021 Cash Receipts Cash Disbursements Date Desc. Amount Date Check# Desc. Amount 7/1 Stock sale $ 25,000 7/1 101 Insurance $ 5,280 7/15 Clinic receipts 2,000 7/2 102 Legal fees 1,700 7/22 Clinic receipts 1,840 7/7 DC Advertising 340 7/30 Clinic receipts 5,500 7/8 103 Bikes 12,400 8/1 Borrowing 34,000 7/24 DC Advertising 740 8/10 Clinic receipts 4,000 8/4 104 Kayaks 33,600 8/17 Clinic receipts 11,200 8/24 DC Office supplies 1,840 9/21 Clinic receipts 13,600 9/1 105 Rent 2,880 10/17 Clinic receipts 18,300 12/8 106 Race permit 1,240 12/15 Race receipts 12,000 12/16 107 Salary 1,800 12/31 108 Dividend 2,500 12/31 109 Dividend 2,500 $ 127,440 $ 66,820 Summary of Transactions Beginning Ending Cash Balance Cash Balance July 1, 2021 + Cash Receipts − Cash Disbursements = December 31, 2021 $ 0 $ 127,440 $ 66,820 $ 60,620 Suzie has not reconciled the company’s cash balance with that of the bank since the company was started. She asks Summit Bank to provide her with a six-month bank statement. To save time, Suzie makes deposits at the bank only on the first day of each month. SUMMIT BANK Member FDIC Leading You to the Top Account Holder: Great Adventures, Inc. Account Number: 1124537774 Statement Date: Dec. 31, 2021 Account Summary Beginning Balance Deposits and Credits Withdrawals and Debits Ending Balance July 1, 2021 No Total No Total December 31, 2021 $0 8 $115,840 11 $60,320 $55,520 Account Details Deposits and Credits Withdrawals and Debits Daily Balance Date Amount Desc. Date No. Amount Desc. Date Amount 7/1 $ 25,000 DEP 7/1 101 $ 5,280 CHK 7/1 $ 19,720 8/1 9,340 DEP 7/7 102 1,700 CHK 7/7 17,680 8/1 34,000 DEP 7/7 340 DC 7/14 5,280 9/1 15,200 DEP 7/14 103 12,400 CHK 7/24 4,540 9/30 300 INT 7/24 740 DC 8/1 47,880 10/1 13,600 DEP 8/9 104 33,600 CHK 8/9 14,280 11/1 18,300 DEP 8/24 1,840 DC 8/24 12,440 12/31 100 INT 9/2 105 2,880 CHK 9/1 27,640 9/30 150 SF 9/2 24,760 12/10 106 1,240 CHK 9/30 24,910 12/31 150 SF 10/1 38,510 11/1 56,810 12/10 55,570 $ 115,840 $ 60,320 12/31 $ 55,520 Desc. DEP Customer deposit INT Interest earned SF Service fees CHK Customer check DC Debit card After comparing the two balances, Suzie has some concern because the bank’s balance of $55,520 is substantially less than the company’s balance of $60,620.

2-a. Prepare Great Adventures’ bank reconciliation for the six-month period ended December 31, 2021.

2-b. Record any necessary entries to adjust cash.

Answer 1

2a
Bank Reconciliation
December 31,2021
Bank's Cash balance		Company's Cash balance
Per bank statement	55520	Per general ledger	60620
Deposits outstanding	12000	Interest earned	400
Checks outstanding	-6800	Service Fees	-300
Bank balance per reconciliation	60720	Company balance per reconciliation	60720
2b
General Journal	Debit	Credit
Cash	400		=300+100
Interest revenue		400
General Journal	Debit	Credit
Service fees expense	300		=150+150
Cash		300