The cash account for Norwegian Medical Co. at April 30 indicated a balance of $14,375. The bank statement indicated a balance of $16,870 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: a. Checks outstanding totaled $6,070. b. A deposit of $6,330, representing receipts of April 30, had been made too late to appear on the bank statement. c. The bank collected $3,290 on a $3,120 note, including interest of $170. d. A check for $660 returned with the statement had been incorrectly recorded by Norwegian Medical Co. as $600. The check was for the payment of an obligation to Universal Supply Co. for a purchase on account. e. A check drawn for $50 had been erroneously charged by the bank as $500. f. Bank service charges for April amounted to $25. Required: 1. Prepare a bank reconciliation. Norwegian Medical Co. Bank Reconciliation April 30 Cash balance according to bank statement Add deposit of April 30, not recorded by bank v Add bank error in charging check as $500 instead of $50 v Deduct outstanding checks v Adjusted balance Cash balance according to company's records Add note and interest collected by bank v Deduct error in recording check v Deduct bank service charges v Adjusted balance Feedback 2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. If an amount box does not require an entry, leave it blank. a. April 30 Cash v Notes Receivable v Interest Revenue v b. April 30 Accounts Payable-Universal Supply Co. Miscellaneous Expense Cash v
The cash account for Norwegian Medical Co. at April 30 indicated a balance of $14,375. The bank statement indicated a balance of $16,870 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: a. Checks outstanding totaled $6,070. b. A deposit of $6,330, representing receipts of April 30, had been made too late to appear on the bank statement. c. The bank collected $3,290 on a $3,120 note, including interest of $170. d. A check for $660 returned with the statement had been incorrectly recorded by Norwegian Medical Co. as $600. The check was for the payment of an obligation to Universal Supply Co. for a purchase on account. e. A check drawn for $50 had been erroneously charged by the bank as $500. f. Bank service charges for April amounted to $25. Required: 1. Prepare a bank reconciliation. Norwegian Medical Co. Bank Reconciliation April 30 Cash balance according to bank statement Add deposit of April 30, not recorded by bank v Add bank error in charging check as $500 instead of $50 v Deduct outstanding checks v Adjusted balance Cash balance according to company's records Add note and interest collected by bank v Deduct error in recording check v Deduct bank service charges v Adjusted balance Feedback 2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. If an amount box does not require an entry, leave it blank. a. April 30 Cash v Notes Receivable v Interest Revenue v b. April 30 Accounts Payable-Universal Supply Co. Miscellaneous Expense Cash v
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:# Bank Reconciliation and Entries
The cash account for Norwegian Medical Co. at April 30 indicated a balance of $14,375. The bank statement indicated a balance of $16,870 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:
a. Checks outstanding totaled $6,070.
b. A deposit of $6,330, representing receipts of April 30, had been made too late to appear on the bank statement.
c. The bank collected $3,290 on a $3,120 note, including interest of $170.
d. A check for $660 returned with the statement had been incorrectly recorded by Norwegian Medical Co. as $600. The check was for the payment of an obligation to Universal Supply Co. for a purchase on account.
e. A check drawn for $50 had been erroneously charged by the bank as $500.
f. Bank service charges for April amounted to $25.
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## Required:
### 1. Prepare a bank reconciliation.
**Norwegian Medical Co. Bank Reconciliation April 30**
- **Cash balance according to bank statement**
- **Add deposit of April 30, not recorded by bank**
- **Add bank error in charging check as $500 instead of $50**
- **Deduct outstanding checks**
- Adjusted balance
- **Cash balance according to company's records**
- **Add note and interest collected by bank**
- **Deduct error in recording check**
- **Deduct bank service charges**
- Adjusted balance
---
### 2. Journalize the necessary entries
**a. Entries that increase cash**
1. Cash
2. Notes Receivable
3. Interest Revenue
**b. Entries that decrease cash**
1. Accounts Payable–Universal Supply Co.
2. Miscellaneous Expense
3. Cash
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