The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $188,438. The bank statement indicated a balance of $195,688 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: a. Checks outstanding totaled $10,427. b. A deposit of $12,300, representing receipts of June 30, had been made too late to appear on the bank statement. c. The bank collected $20,500 on a $25,000 note, including interest of $1,500. d. Acheck for $4,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $400. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account. e. Acheck drawn for $195 had been erroneously charged by the bank as $915. f. Bank service charges for June amounted to $55. 1. Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Add" & Deduct "will automatically appear if it is required For those boxes in which you must enter subtracted or negative numbers use a minus sign. 2. Joumalize the necessary entries Refer to the Chart of Accounts for exract wording of account titles 3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?
The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $188,438. The bank statement indicated a balance of $195,688 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: a. Checks outstanding totaled $10,427. b. A deposit of $12,300, representing receipts of June 30, had been made too late to appear on the bank statement. c. The bank collected $20,500 on a $25,000 note, including interest of $1,500. d. Acheck for $4,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $400. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account. e. Acheck drawn for $195 had been erroneously charged by the bank as $915. f. Bank service charges for June amounted to $55. 1. Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Add" & Deduct "will automatically appear if it is required For those boxes in which you must enter subtracted or negative numbers use a minus sign. 2. Joumalize the necessary entries Refer to the Chart of Accounts for exract wording of account titles 3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $188,438. The bank statement indicated a balance of $195,688 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos
with the records revealed the following reconciling items:
a. Checks outstanding totaled $19,427.
b. A deposit of S12,300, representing receipts of June 30, had been made too late to appear on the bank statement.
c. The bank collected $28,500 on a $25,000 note, including interest of $1,500.
d. A check for $4,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $400. The check was for the payment of
an obligation to Skyline Supply Co. for a purchase on account.
e. A check drawn for $195 had been erroneously charged by the bank as $915.
f. Bank service charges for June amounted to $55
1. Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Add:"
& Deduct. "will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus
sign.
2. Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles.
3. Ifa balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?
Expert Solution
Step 1
Ideally cash balance as per cashbook and bank balance as per bank statement must reconcile with each other. If there is any difference, then bank reconciliation statement must be prepared to reconcile the differences.
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