El Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at the end of each month. The November 30, 2024, reconciliation of the bank balance is as follows: Balance per bank, November 30 $ 3,311 Add: Deposits outstanding 1,280 Less: Checks outstanding #363 $ 131 #365 209 #380 64 #381 94 #382 420 (918) Adjusted balance per bank, November 30 $ 3,673 The company’s general ledger checking account showed the following for December: Balance, December 1 $ 3,673 Receipts 43,450 Disbursements (42,653) Balance, December 31 $ 4,470 The December bank statement contained the following information: Balance, December 1 $ 3,311 Deposits 43,800 Checks processed (42,718) Service charges (30) NSF checks (520) Balance, December 31 $ 3,843 The checks that were processed by the bank in December include all of the outstanding checks at the end of November except for check #365. In addition, there are some December checks that had not been processed by the bank by the end of the month. Also, you discover that check #411 for $630 was correctly recorded by the bank but was incorrectly recorded on the books as a $360 disbursement for advertising expense. Included in the bank’s deposits is a $2,100 deposit incorrectly credited to the company’s account. The deposit should have been posted to the credit of the Los Gatos Company. The NSF checks have not been redeposited and the company will seek payment from the customers involved. Required: Prepare a bank reconciliation for the El Gato checking account at December 31, 2024. Prepare any necessary adjusting journal entries indicated.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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El Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at the end of each month. The November 30, 2024, reconciliation of the bank balance is as follows:

Balance per bank, November 30		$ 3,311
Add: Deposits outstanding		1,280
Less: Checks outstanding
#363	$ 131
#365	209
#380	64
#381	94
#382	420	(918)
Adjusted balance per bank, November 30		$ 3,673

The company’s general ledger checking account showed the following for December:

Balance, December 1	$ 3,673
Receipts	43,450
Disbursements	(42,653)
Balance, December 31	$ 4,470

The December bank statement contained the following information:

Balance, December 1	$ 3,311
Deposits	43,800
Checks processed	(42,718)
Service charges	(30)
NSF checks	(520)
Balance, December 31	$ 3,843

The checks that were processed by the bank in December include all of the outstanding checks at the end of November except for check #365. In addition, there are some December checks that had not been processed by the bank by the end of the month. Also, you discover that check #411 for $630 was correctly recorded by the bank but was incorrectly recorded on the books as a $360 disbursement for advertising expense. Included in the bank’s deposits is a $2,100 deposit incorrectly credited to the company’s account. The deposit should have been posted to the credit of the Los Gatos Company. The NSF checks have not been redeposited and the company will seek payment from the customers involved.

Required:

Prepare a bank reconciliation for the El Gato checking account at December 31, 2024.
Prepare any necessary adjusting journal entries indicated.

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