HappyHeart Biomedical Complex recently received its bank statement for the month of August 2023 from People's Capital Bank. The book balance as stated in the cash account differs from the balance that appears on the bank statement. Comparing the bank statement, the canceled cheques, and the accompanying memos with the records revealed the following reconciling items: i) The ledger account for Cash showed a balance on August 31 of $7,280 ii) The August bank statement showed a closing balance of $12,550. iii) Examination of the paid cheques revealed that cheques #441 and #443 for $4,500 and $2,940, respectively, were not amongst the cancelled cheques returned with the statement. iv) During the evening of August 30, a deposit of $2,880 was placed in the night deposit box at the bank after closing hours; this is not shown on the bank statement. v) The bank collected $2,080 on a note left for collection. The face of the note was $2,000. vi) A cheque for $580 returned with the statement had been incorrectly charged by the bank as $850. vii) A cheque for $900 from Renea Express was returned by the bank due to "Unauthorized signature". viii) A cheque for $640 returned with the statement had been recorded by HappyHeart Biomedical Complex as $460. The cheque was for the payment of an obligation to Danny Phantom Co. for a purchase on account. ix) Bank service charges for August amounted to $20. Required: a) Prepare a bank reconciliation statement for HappyHeart Biomedical Complex as of August 31, 2023. State the amount of cash that should be included in the balance sheet on August 31. b) Prepare the journal entries necessary to bring the company's book balance of cash into conformity with the reconciled cash balance as of August 31, 2023. c) State and explain four (4) reasons why the cash balance as per the bank statement is often different from the cash book balance in a business' accounting records.
HappyHeart Biomedical Complex recently received its bank statement for the month of August 2023 from People's Capital Bank. The book balance as stated in the cash account differs from the balance that appears on the bank statement. Comparing the bank statement, the canceled cheques, and the accompanying memos with the records revealed the following reconciling items: i) The ledger account for Cash showed a balance on August 31 of $7,280 ii) The August bank statement showed a closing balance of $12,550. iii) Examination of the paid cheques revealed that cheques #441 and #443 for $4,500 and $2,940, respectively, were not amongst the cancelled cheques returned with the statement. iv) During the evening of August 30, a deposit of $2,880 was placed in the night deposit box at the bank after closing hours; this is not shown on the bank statement. v) The bank collected $2,080 on a note left for collection. The face of the note was $2,000. vi) A cheque for $580 returned with the statement had been incorrectly charged by the bank as $850. vii) A cheque for $900 from Renea Express was returned by the bank due to "Unauthorized signature". viii) A cheque for $640 returned with the statement had been recorded by HappyHeart Biomedical Complex as $460. The cheque was for the payment of an obligation to Danny Phantom Co. for a purchase on account. ix) Bank service charges for August amounted to $20. Required: a) Prepare a bank reconciliation statement for HappyHeart Biomedical Complex as of August 31, 2023. State the amount of cash that should be included in the balance sheet on August 31. b) Prepare the journal entries necessary to bring the company's book balance of cash into conformity with the reconciled cash balance as of August 31, 2023. c) State and explain four (4) reasons why the cash balance as per the bank statement is often different from the cash book balance in a business' accounting records.
College Accounting (Book Only): A Career Approach
13th Edition
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:Scott, Cathy J.
Chapter6: Bank Accounts, Cash Funds, And Internal Controls
Section: Chapter Questions
Problem 4PB
Related questions
Question
Please solve this question with working out so I can understand. Thank you.
Transcribed Image Text:HappyHeart Biomedical Complex recently received its bank statement for the month of August
2023 from People's Capital Bank. The book balance as stated in the cash account differs from
the balance that appears on the bank statement. Comparing the bank statement, the canceled
cheques, and the accompanying memos with the records revealed the following reconciling
items:
i) The ledger account for Cash showed a balance on August 31 of $7,280
ii) The August bank statement showed a closing balance of $12,550.
iii) Examination of the paid cheques revealed that cheques #441 and #443 for $4,500 and
$2,940, respectively, were not amongst the cancelled cheques returned with the statement.
iv) During the evening of August 30, a deposit of $2,880 was placed in the night deposit box at
the bank after closing hours; this is not shown on the bank statement.
v) The bank collected $2,080 on a note left for collection. The face of the note was $2,000.
vi) A cheque for $580 returned with the statement had been incorrectly charged by the bank as
$850.
vii) A cheque for $900 from Renea Express was returned by the bank due to "Unauthorized
signature".
viii) A cheque for $640 returned with the statement had been recorded by HappyHeart
Biomedical Complex as $460. The cheque was for the payment of an obligation to Danny
Phantom Co. for a purchase on account.
ix) Bank service charges for August amounted to $20.
Required:
a) Prepare a bank reconciliation statement for HappyHeart Biomedical Complex as of
August 31, 2023. State the amount of cash that should be included in the balance sheet
on August 31.
b) Prepare the journal entries necessary to bring the company's book balance of cash into
conformity with the reconciled cash balance as of August 31, 2023.
c) State and explain four (4) reasons why the cash balance as per the bank statement is
often different from the cash book balance in a business' accounting records.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
College Accounting (Book Only): A Career Approach
Accounting
ISBN:
9781337280570
Author:
Scott, Cathy J.
Publisher:
South-Western College Pub
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:
9781337280570
Author:
Scott, Cathy J.
Publisher:
South-Western College Pub
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,