Rick Hall owns a card shop, Hall's Cards. The following cash information is available for the month of August Year 1: As of August 31, the bank statement shows a balance of $10,160. The August 31 unadjusted balance in the Cash account of Hall's C is $7,285. A review of the bank statement revealed the following information: 1. A deposit of $2,000 on August 31, Year 1, does not appear on the August bank statement. 2. It was discovered that a check to pay for baseball cards was correctly written and paid by the bank for $2,040 but was recorded the books as $2,940. 3. When checks written during the month were compared with those paid by the bank, three checks amounting to $4,060 were fou to be outstanding. 4. A debit memo for $85 was included in the bank statement for the purchase of a new supply of checks. Required Prepare a bank reconciliation at the end of August showing the true cash balance. (Negative amounts should be indicated with minus sign.)
Rick Hall owns a card shop, Hall's Cards. The following cash information is available for the month of August Year 1: As of August 31, the bank statement shows a balance of $10,160. The August 31 unadjusted balance in the Cash account of Hall's C is $7,285. A review of the bank statement revealed the following information: 1. A deposit of $2,000 on August 31, Year 1, does not appear on the August bank statement. 2. It was discovered that a check to pay for baseball cards was correctly written and paid by the bank for $2,040 but was recorded the books as $2,940. 3. When checks written during the month were compared with those paid by the bank, three checks amounting to $4,060 were fou to be outstanding. 4. A debit memo for $85 was included in the bank statement for the purchase of a new supply of checks. Required Prepare a bank reconciliation at the end of August showing the true cash balance. (Negative amounts should be indicated with minus sign.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please help me fill out this bank reconciliation showing the true cash balance.
Transcribed Image Text:### HALL'S CARDS
## Bank Reconciliation
#### August 31, Year 1
---
**Unadjusted Bank Balance, August 31, Year 1**
____________________________________
(Blank space for data entry)
---
**True Cash Balance, August 31, Year 1**
____________________________________
(Blank space for data entry)
---
**Unadjusted Book Balance, August 31, Year 1**
____________________________________
(Blank space for data entry)
---
**True Cash Balance, August 31, Year 1**
____________________________________
(Blank space for data entry)
![### Bank Reconciliation Example for Educational Purposes
**Scenario:**
Rick Hall owns a card shop, Hall’s Cards. The following cash information is available for the month of August, Year 1:
**As of August 31:**
- The bank statement shows a balance of $10,160.
- The August 31 unadjusted balance in the Cash account of Hall’s Cards is $7,285.
A review of the bank statement revealed the following information:
1. A deposit of $2,000 on August 31, Year 1, does not appear on the August bank statement.
2. It was discovered that a check to pay for baseball cards was correctly written and paid by the bank for $2,040 but was recorded on the books as $2,940.
3. When checks written during the month were compared with those paid by the bank, three checks amounting to $4,060 were found to be outstanding.
4. A debit memo for $85 was included in the bank statement for the purchase of a new supply of checks.
### Required:
Prepare a bank reconciliation at the end of August showing the true cash balance.
**Note:** Negative amounts should be indicated with a minus sign (-).
### Detailed Explanation:
A bank reconciliation involves adjusting both the bank statement and the company's cash account to reflect the actual cash available. Here are the steps:
**Bank Statement Adjustments:**
1. **Add: Deposits in Transit**
- $2,000 (Deposit on August 31 not appearing in the bank statement)
2. **Subtract: Outstanding Checks**
- $4,060 (Outstanding checks not yet cashed by the bank)
**Adjusted Bank Balance:**
\[
\text{Bank Statement Balance} + \text{Deposits in Transit} - \text{Outstanding Checks}
\]
\[
= \$10,160 + \$2,000 - \$4,060
\]
\[
= \$8,100
\]
**Company's Cash Account Adjustments:**
1. **Subtract: Error in recording payment for baseball cards**
- The book recorded $2,940 instead of $2,040.
- Difference to adjust: $2,940 - $2,040 = $900
2. **Subtract: Debit memo**
- $85 (For new supply of checks)
**Adjusted Cash Account Balance:**
\[
\text{Unadjusted Cash Balance} - \](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdbf8765a-c0ab-46fe-8663-61e338d72b7c%2Fac54253f-25ed-4040-a683-d50f1220b65b%2Fw3938fo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Bank Reconciliation Example for Educational Purposes
**Scenario:**
Rick Hall owns a card shop, Hall’s Cards. The following cash information is available for the month of August, Year 1:
**As of August 31:**
- The bank statement shows a balance of $10,160.
- The August 31 unadjusted balance in the Cash account of Hall’s Cards is $7,285.
A review of the bank statement revealed the following information:
1. A deposit of $2,000 on August 31, Year 1, does not appear on the August bank statement.
2. It was discovered that a check to pay for baseball cards was correctly written and paid by the bank for $2,040 but was recorded on the books as $2,940.
3. When checks written during the month were compared with those paid by the bank, three checks amounting to $4,060 were found to be outstanding.
4. A debit memo for $85 was included in the bank statement for the purchase of a new supply of checks.
### Required:
Prepare a bank reconciliation at the end of August showing the true cash balance.
**Note:** Negative amounts should be indicated with a minus sign (-).
### Detailed Explanation:
A bank reconciliation involves adjusting both the bank statement and the company's cash account to reflect the actual cash available. Here are the steps:
**Bank Statement Adjustments:**
1. **Add: Deposits in Transit**
- $2,000 (Deposit on August 31 not appearing in the bank statement)
2. **Subtract: Outstanding Checks**
- $4,060 (Outstanding checks not yet cashed by the bank)
**Adjusted Bank Balance:**
\[
\text{Bank Statement Balance} + \text{Deposits in Transit} - \text{Outstanding Checks}
\]
\[
= \$10,160 + \$2,000 - \$4,060
\]
\[
= \$8,100
\]
**Company's Cash Account Adjustments:**
1. **Subtract: Error in recording payment for baseball cards**
- The book recorded $2,940 instead of $2,040.
- Difference to adjust: $2,940 - $2,040 = $900
2. **Subtract: Debit memo**
- $85 (For new supply of checks)
**Adjusted Cash Account Balance:**
\[
\text{Unadjusted Cash Balance} - \
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