0BJ S The cash account for Capstone Medical Co. at November 30, 2016, indicated a balance of $89,620. The bank statement indicated a balance of $128,660 on November 30, 2016. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: a. Checks outstanding totaled $32,700. b. A deposit of $18,550, representing receipts of November 30, had been made too late to appear on the bank statement. c. The bank collected $26,750 on a $25,000 note, including interest of $1,750. d. A check for $1,500 returned with the statement had been incorrectly recorded by Capstone Medical Co. as $150. The check was for the payment of an obligation to ABC Supply Co. for a purchase on account. e. A check drawn for $490 had been erroncously charged by the bank as $940. f. Bank service charges for November amounted to $60. PR 7-3A Bank reconciliation and entries Instructions 1. Prepare a bank reconciliation. 2. Journalize the necessary entries. The accounts have not been closed. 3. If a balance sheet were prepared for Capstone Medical Co. on November 30, 2016, what amount should be reported as cash?
0BJ S The cash account for Capstone Medical Co. at November 30, 2016, indicated a balance of $89,620. The bank statement indicated a balance of $128,660 on November 30, 2016. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: a. Checks outstanding totaled $32,700. b. A deposit of $18,550, representing receipts of November 30, had been made too late to appear on the bank statement. c. The bank collected $26,750 on a $25,000 note, including interest of $1,750. d. A check for $1,500 returned with the statement had been incorrectly recorded by Capstone Medical Co. as $150. The check was for the payment of an obligation to ABC Supply Co. for a purchase on account. e. A check drawn for $490 had been erroncously charged by the bank as $940. f. Bank service charges for November amounted to $60. PR 7-3A Bank reconciliation and entries Instructions 1. Prepare a bank reconciliation. 2. Journalize the necessary entries. The accounts have not been closed. 3. If a balance sheet were prepared for Capstone Medical Co. on November 30, 2016, what amount should be reported as cash?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PR 7-3A
![**Bank Reconciliation and Entries (PR 7-3A)**
---
### Educational Content:
**Objective:**
Understanding how to prepare a bank reconciliation and the necessary journal entries.
**Scenario:**
The cash account for Capstone Medical Co. at November 30, 2016, indicated a balance of $89,620. The bank statement indicated a balance of $128,680 on November 30, 2016. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:
1. **Checks outstanding**: $32,700.
2. **Late deposit**: A deposit of $18,550, representing receipts of November 30, had been made too late to appear on the bank statement.
3. **Bank collection on note**: The bank collected $26,750 on a $25,000 note, including interest of $1,750.
4. **Erroneous recording of a check**: A check for $1,500 returned with the statement had been incorrectly recorded by Capstone Medical Co. as $150. The check was for the payment of an obligation to ABC Supply Co. for a purchase on account.
5. **Erroneous bank charge**: A check drawn for $490 had been erroneously charged by the bank as $940.
6. **Bank service charges**: Bank service charges for November amounted to $60.
**Instructions:**
1. **Prepare a bank reconciliation.**
2. **Journalize the necessary entries.** The accounts have not been closed.
3. **Balance sheet amount for cash**: If a balance sheet were prepared for Capstone Medical Co. on November 30, 2016, what amount should be reported as cash?
---
### Detailed Explanation:
**1. Preparation of Bank Reconciliation:**
* Adjust the bank statement balance:
- Add deposits in transit (not recorded by the bank): $18,550.
- Subtract outstanding checks: $32,700.
- Adjust for bank errors (check drawn for $490 erroneously charged as $940): Add $450.
* Adjust the cash account balance as per the company's books:
- Add collections made by the bank: $26,750.
- Subtract bank service charges: $60.
- Adjust for company errors: Subtract $1,350 ([$1,500 - $150] erroneously recorded](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa14d34db-396f-4354-9104-8842c8447278%2Fee1fb1be-4518-4821-9c74-a1a27467060b%2Fyxvv2n5_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Bank Reconciliation and Entries (PR 7-3A)**
---
### Educational Content:
**Objective:**
Understanding how to prepare a bank reconciliation and the necessary journal entries.
**Scenario:**
The cash account for Capstone Medical Co. at November 30, 2016, indicated a balance of $89,620. The bank statement indicated a balance of $128,680 on November 30, 2016. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:
1. **Checks outstanding**: $32,700.
2. **Late deposit**: A deposit of $18,550, representing receipts of November 30, had been made too late to appear on the bank statement.
3. **Bank collection on note**: The bank collected $26,750 on a $25,000 note, including interest of $1,750.
4. **Erroneous recording of a check**: A check for $1,500 returned with the statement had been incorrectly recorded by Capstone Medical Co. as $150. The check was for the payment of an obligation to ABC Supply Co. for a purchase on account.
5. **Erroneous bank charge**: A check drawn for $490 had been erroneously charged by the bank as $940.
6. **Bank service charges**: Bank service charges for November amounted to $60.
**Instructions:**
1. **Prepare a bank reconciliation.**
2. **Journalize the necessary entries.** The accounts have not been closed.
3. **Balance sheet amount for cash**: If a balance sheet were prepared for Capstone Medical Co. on November 30, 2016, what amount should be reported as cash?
---
### Detailed Explanation:
**1. Preparation of Bank Reconciliation:**
* Adjust the bank statement balance:
- Add deposits in transit (not recorded by the bank): $18,550.
- Subtract outstanding checks: $32,700.
- Adjust for bank errors (check drawn for $490 erroneously charged as $940): Add $450.
* Adjust the cash account balance as per the company's books:
- Add collections made by the bank: $26,750.
- Subtract bank service charges: $60.
- Adjust for company errors: Subtract $1,350 ([$1,500 - $150] erroneously recorded
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