Question

Oscar's Red Carpet Store maintains a checking account with Academy Bank. Oscar's sells carpet each day but makes bank deposits only once per week. The following provides information from the company's cash ledger for the month ending February 28, 2018.
Date Amount
Deposits: 2/4 $2,700
2/11 2,300
2/18 3,200
2/25 4,100
Cash receipts: 2/26-2/28 1,600
$13,900
Checks
No. Date Amount
321 2/2 $4,700
322 2/8 400
323 2/12 2,500
324 2/19 2.200
325 2/27 200
326 2/28 700
327 2/28 1,900
$12,600

Balance on February 1 $6,800
Receipts 13,900
Disbursements (12,600)
Balance on February 28 $8,100
Information from February's bank statement and company records reveal the following additional information:

a. The ending cash balance recorded in the bank statement is $13,145.

b. Cash receipts of $1,600 from 2/26-2/28 are outstanding.

c. Checks 325 and 327 are outstanding.

d. The deposit on 2/11 includes a customer's check for $200 that did not clear the bank.

e. Check 323 was written for $2,800 for advertising in February. The bank properly recorded the check for this amount.

f. An automatic withdrawal for Oscar's February rent was made on February 4 for $1,100.

Required:

a. Prepare a bank reconciliation for Oscar?s checking account on February 28, 2018.

b. Record the necessary cash adjustments.

Answer 1

Answer:

Some part of this question is missing (refer to attachment for missing part of question)

A bank Reconciliation statement is required to agree the Cash Ledger of the Business. Differences are highlighted and subjected to test to understand and justify their existence. It is with a Bank reconciliation statement we can be sure the transactions posted in our Cash Book and Bank records are accurate.

An adjusted Cash Book may need to be drawn up to capture activities in the Bank that was not known to the Treasury Analyst.

Having done this, both the Bank reconciliation should agree with the adjusted Cash Book.

Explanation:

Red Carpet Store

Bank reconciliation Statement

For the Month ending February 28, 2018

Balance per Bank statement $13,325

Add Cash Receipts 26-28 Feb not recorded $1,600

Deduct Undebited Cheques

• 325 = $200

• 327 = $1,900
• Total undebited Cheque = -$2100

Balance as per adjusted Cash Book $12,825

Adjusted Cash Book

As at February 28 2018

Opening Balance $8,100

Deduct uncleared cheque -$200

Deduct Under-recording of Chq 323 -$300

Deduct Feb rent automatic withdrawal -$1,100

Add Interest earned on daily balance $200

Add Repayment of Titanic Loan & interest &6,250

Deduct charges (NSF, Titanic repayment & Automatic rent payment) -$125

Adjusted cash balance = $12,825