Answer:
1. Cash balance according to bank statement $370,000
Cash balance according to company’s records $370,000
2. a.	April 30
Dr Cash	$42,000	
 Cr Notes Receivable $40,000
 Cr Interest Income / Interest Revenue $2,000
b.	April 30	
Dr Accounts Payable - Targhee Supply Co $6,840	
Dr Miscellaneous Expenses [Bank service charge]	$145	
 Cr Cash $6,985
3. $370,000
Explanation:
1. Preparation of a bank reconciliation
AMERICAN MEDICAL COMPANY
Bank Reconciliation
April 30
Cash balance according to bank statement $388,600
Add: Deposit of April 30, Not recorded by bank	$42,500	
Add: Bank Error in Charging check as $420 instead of $240 [$420 - $240]	$180	
Deduct: Outstanding Checks $61,280
Adjusted balance $370,000
Cash balance according to company’s records $334,985
Add: Note and Interest Collected by bank $42,000
Deduct: Error in Recording Check [$7,600 - $760]	$6,840	
Deduct: Bank Service Charges	$145
Adjusted balance $370,000
2. Preparation of Journal entries. 
Journal entries
a.	April 30
Dr Cash	$42,000	
 Cr Notes Receivable $40,000
 Cr Interest Income / Interest Revenue $2,000
b.	April 30	
Dr Accounts Payable - Targhee Supply Co [$7,600 - $760]	$6,840	
Dr Miscellaneous Expenses [Bank service charge]	$145	
 Cr Cash $6,985
($6,840+$145)
3. Based on the information given If a balance sheet is prepared for American Medical Co. on April 30, the amount that should be reported as cash will be $370,000