Correcting errors revealed by a bank reconciliation.
During the bank reconciliation process at Little Guy Movers Corporation on March 3, 2010, the following errors were discovered in the firm’s records.
a. The checkbook and the general journal indicated that Check 1201 dated February 8 was issued for $316 to pay for hauling expenses. However, examination of the canceled check and the listing on the bank statement showed that the actual amount of the check was $308.
b. The checkbook and the general journal indicated that Check 1222 dated February 24 was issued for $404 to pay a telephone bill. However, examination of the canceled check and the listing on the bank statement showed that the actual amount of the check was $440.
INSTRUCTIONS
1. Prepare the adjusted book balance section of the firm’s bank reconciliation statement. The book balance as of February 28, 2010, was $19,451. The errors listed are the only two items that affect the book balance.
2. Prepare general journal entries to correct the errors. Date the entries February 28, 2010. Check 1201 was debited to Hauling Expense on February 8, and Check 1222 was debited to Telephone Expense on February 24.
Analyze: What net change to the Cash account occurred as a result of the correcting journal entries?
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