Computing Outstanding Checks and Deposits in Transit and Preparing a Bank Reconciliation and Journal Entries (AP6-5)
The August 201 I bank statement for Allison Company and the August 2011 ledger account for cash follow:
BANK STATEMENT | |||
Date | Checks | Deposit s | Balance |
Aug.1 |
|
| $17,510 |
2 | $320 |
| 17,190 |
3 |
| $11,700 | 28,890 |
4 | 430 |
| 28,460 |
5 | 270 |
| 28,190 |
9 | 880 |
| 27,310 |
10 | 250 |
| 27,060 |
15 |
| 4,000 | 31,060 |
21 | 350 |
| 30.710 |
24 | 20,400 |
| 10,310 |
25 |
| 6,500 | 16,810 |
30 | 850 |
| 15,960 |
30 |
| 2,350* | 18,310 |
31 | 120* |
| 18,190 |
| Cash(A) |
|
|
Aug. 1Balance | 16,490 | Checks written |
|
Deposits | 11,700 | Aug. 2 | 250 |
Aug. 2 | 4,000 | 4 | 880 |
12 | 6,500 | 15 | 280 |
24 | 5,200 | 17 | 510 |
31 |
| 78 | 850 |
|
| 20 | 350 |
|
| 23 | 20,400 |
Outstanding checks at the end of Jul y were for $270, $430, and $320. No deposits were in transit at the end of Jul y.
Required:
1. Compute the deposits in transit at the end of August by comparing the deposits on the bank statement to the deposits listed on the cash ledger account.
2. Compute the outstanding check s at the end of August by comparing the checks listed on the bank statement with those on the cash ledger account and the list of outstanding checks at the end of July.
3. Prepare a bank reconciliation for August.
4. Give any journal entries that the company should make as a result of the bank reconciliation. Why are they necessary?
5. What total amount of cash should be reported on the August 3 1, 20 I I. balance sheet?
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