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 $ 3,261 Add: Deposits outstanding 1,230 Less: Checks outstanding #363 $ 126 #365 204 #380 59 #381 89 #382 370 (848) Adjusted balance per bank, November 30 $ 3,643 The company’s general ledger checking account showed the following for December: Balance, December 1 $ 3,643 Receipts 42,950 Disbursements (42,153) Balance, December 31 $ 4,440 The December bank statement contained the following information: Balance, December 1 $ 3,261 Deposits 43,300 Checks processed (42,218) Service charges (25) NSF checks (470) Balance, December 31 $ 3,848 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 $650 was correctly recorded by the bank but was incorrectly recorded on the books as a $560 disbursement for advertising expense. Included in the bank’s deposits is a $1,600 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. Prepare a bank reconciliation for the El Gato checking account at December 31, 2024. Prepare any necessary adjusting journal entries indicated. Bank Reconciliation Balance per bank statement $3,848 Add: Deposits outstanding 2,480 Deduct: Bank error (1,600) Outstanding checks Corrected cash balance Balance per books Deduct: Error in recording check NSF checks Service charges Corrected book balance

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		$ 3,261
Add: Deposits outstanding		1,230
Less: Checks outstanding
#363	$ 126
#365	204
#380	59
#381	89
#382	370	(848)
Adjusted balance per bank, November 30		$ 3,643

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

Balance, December 1	$ 3,643
Receipts	42,950
Disbursements	(42,153)
Balance, December 31	$ 4,440

The December bank statement contained the following information:

Balance, December 1	$ 3,261
Deposits	43,300
Checks processed	(42,218)
Service charges	(25)
NSF checks	(470)
Balance, December 31	$ 3,848

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 $650 was correctly recorded by the bank but was incorrectly recorded on the books as a $560 disbursement for advertising expense. Included in the bank’s deposits is a $1,600 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.

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

Bank Reconciliation
Balance per bank statement	$3,848
Add:
Deposits outstanding	2,480

Deduct:
Bank error	(1,600)
Outstanding checks

Corrected cash balance
Balance per books
Deduct:
Error in recording check
NSF checks
Service charges

Corrected book balance

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