The cash account for American Medical Co. at April 30 indicated a balance of $14,415. The bank statement indicated a balance of $16,690 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: Checks outstanding totaled $6,010. A deposit of $6,260, representing receipts of April 30, had been made too late to appear on the bank statement. The bank collected $3,250 on a $3,090 note, including interest of $160. A check for $440 returned with the statement had been incorrectly recorded by American Medical Co. as $400. The check was for the payment of an obligation to Targhee Supply Co. for a purchase on account. A check drawn for $70 had been erroneously charged by the bank as $700. Bank service charges for April amounted to $55. Required: 1. Prepare a bank reconciliation. American Medical Co. Bank Reconciliation April 30 Cash balance according to bank statement $ 16,690 Add deposit of April 30, not recorded by bank $ 16,690 Add bank error in charging check as $700 instead of $70 720 Deduct outstanding checks -5,850 Adjusted balance $ 17,210 Cash balance according to company's records $ 14,145 Add note and interest collected by bank 3,170 Deduct error in recording check $ Deduct bank service charges Adjusted balance $ 2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank. a. April 30 Cash Notes Receivable Interest Payable b. April 30 Accounts Payable-Targhee Supply Co. Cash 3. If a balance sheet is prepared for American Medical Co. on April 30, what amount should be reported as cash?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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ank Reconciliation and Entries The cash account for American Medical Co. at April 30 indicated a balance of $14,415. The bank statement indicated a balance of $16,690 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: Checks outstanding totaled $6,010. A deposit of $6,260, representing receipts of April 30, had been made too late to appear on the bank statement. The bank collected $3,250 on a $3,090 note, including interest of $160. A check for $440 returned with the statement had been incorrectly recorded by American Medical Co. as $400. The check was for the payment of an obligation to Targhee Supply Co. for a purchase on account. A check drawn for $70 had been erroneously charged by the bank as $700. Bank service charges for April amounted to $55. Required: 1. Prepare a bank reconciliation. American Medical Co. Bank Reconciliation April 30 Cash balance according to bank statement $ 16,690 Add deposit of April 30, not recorded by bank $ 16,690 Add bank error in charging check as $700 instead of $70 720 Deduct outstanding checks -5,850 Adjusted balance $ 17,210 Cash balance according to company's records $ 14,145 Add note and interest collected by bank 3,170 Deduct error in recording check $ Deduct bank service charges Adjusted balance $ 2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank. a. April 30 Cash Notes Receivable Interest Payable b. April 30 Accounts Payable-Targhee Supply Co. Cash 3. If a balance sheet is prepared for American Medical Co. on April 30, what amount should be reported as cash? $

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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