Question

The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6: 1. Cash balance according to the company’s records at August 31, $20,870. 2. Cash balance according to the bank statement at August 31, $37,600. 3. Checks outstanding, $23,375. 4. Deposit in transit not recorded by bank, $7,500. 5. A check for $100 in payment of an account was erroneously recorded in the check register as $1,000. 6. Bank debit memo for service charges, $45. A. Prepare a bank reconciliation, using the format shown in Exhibit 13. B. If the balance sheet were prepared for Creative Design Co. on August 31 what amount should be reported for cash? C. Must a bank reconciliation always balance (reconcile)?
journalize the entry or entries that should be made by the company.

Answer 1

Answer:

The amount should the bank report = $ 21725

Explanation:

Entries:

3.Dr  accounts payable    23375

        Cr Bank                           23375

4. Dr Bank    7500

        Cr Account receivable   7500

5. Dr Bank  900

               Cr Accounts payable 900

  (Error in check)

6. Dr Bank charges    45

              Cr Bank                45.

   (To record bank charges)

                                       

                                        Creative Design co

                                Bank Reconciliation statement

                                                                                                              $

Balance as per bank statement as Aug  -20Y6                      =  37600

Adjustment:

Add: Deposit in transit                                                                  = 7500

Less: Outstanding checks                                                            = (23375)

Adjusted balance                                                                              21725.

Balance as per Cash book                                                            = 20870

Less : Bank charges                                                                      =  (45)

Add: Error in check                                                                        = 900

 Adjusted Balance                                                                           21725