The Cash account of Alex Co. showed a ledger balance of $3,969.85 on June 30, 2015. The
bank statement as of that date showed a balance of $4,150. Upon comparing the statement
with the cash records, the following facts were determined.
1. There were bank service charges for June of $25.
2. A bank memo stated that Bao Dai’s note for $1,200 and interest of $36 had been collected on
June 29, and the bank had made a charge of $5.50 on the collection. (No entry had been made on
Alex co books when XYZ ’s note was sent to the bank for collection.)
3. Receipts for June 30 for $3,390 were not deposited until July 2.
4. Checks outstanding on June 30 totaled $2,136.05
5. The bank had charged the Aguilar Co.’s account for a customer’s uncollectible check
amounting to $253.20 on June 29.
6. A customer’s check for $90 had been entered as $60 in the cash receipts journal by Aguilar on
June 15.
7. Check no. 742 in the amount of $491 had been entered in the cash journal as $419, and check
no. 747 in the amount of $58.20 had been entered as $582. Both checks had been issued to pay
for purchases of equipment.
Instructions
(a) Prepare a bank reconciliation dated June 30, 2015, proceeding to a correct cash balance.
(b) Prepare any entries necessary to make the books correct and comple
(a) Bank Reconciliation as of June 30, 2015:
Bank balance per bank statement: $4,150.00
Add: Deposits in transit (3,390.00)
Less: Outstanding checks (2,136.05)
Adjusted bank balance: $5,403.95
Cash balance per books: $3,969.85
Add: Bank collections*
Deduct: Bank service charges (25.00)
Adjusted book balance: $5,163.95
Adjusted bank balance per bank reconciliation: $5,403.95
Adjusted book balance per bank reconciliation: $5,163.95
(b) Entries necessary to make the books correct and complete:
1. Bank collections:
Bank collections* $1,200.00
Interest revenue $36.00
Bank service charge $5.50
Cash $1,230.50
2. Deposits in transit (3,390.00):
Cash $3,390.00
Accounts Receivable $3,390.00
3. Outstanding check (491.00):
Cash $72.00
Accounts Payable $72.00
4. Outstanding check (58.20):
Cash $523.80
Accounts Payable $523.80
5. Correcting entry for Aguilar Co.'s customer check error:
Cash $30.00
Accounts Receivable $30.00
*Note: The bank collection was not recorded in Alex Co.'s books, so it is being recorded now.
After making these entries, the cash balance in the books should reconcile with the bank balance of $5,403.95.