The cash account for Stone Systems at July 31, 20Y5, indicated a balance of $8,680. The bank statement indicated a balance of $11,180 on July 31, 20Y5. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items: Checks outstanding totaled $4,020. A deposit of $4,190, representing receipts of July 31, had been made too late to appear on the bank statement. The bank had collected $2,180 on a note left for collection. The face of the note was $2,070. A check for $700 returned with the statement had been incorrectly recorded by Stone Systems as $770. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account. A check drawn for $500 had been incorrectly charged by the bank as $50. Bank service charges for July amounted to $30.
The cash account for Stone Systems at July 31, 20Y5, indicated a balance of $8,680. The bank statement indicated a balance of $11,180 on July 31, 20Y5. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items: Checks outstanding totaled $4,020. A deposit of $4,190, representing receipts of July 31, had been made too late to appear on the bank statement. The bank had collected $2,180 on a note left for collection. The face of the note was $2,070. A check for $700 returned with the statement had been incorrectly recorded by Stone Systems as $770. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account. A check drawn for $500 had been incorrectly charged by the bank as $50. Bank service charges for July amounted to $30.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bank reconciliation and entries
The cash account for Stone Systems at July 31, 20Y5, indicated a balance of $8,680. The bank statement indicated a balance of $11,180 on July 31, 20Y5. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:
Checks outstanding totaled $4,020.
A deposit of $4,190, representing receipts of July 31, had been made too late to appear on the bank statement.
The bank had collected $2,180 on a note left for collection. The face of the note was $2,070.
A check for $700 returned with the statement had been incorrectly recorded by Stone Systems as $770. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account.
A check drawn for $500 had been incorrectly charged by the bank as $50.
Bank service charges for July amounted to $30.
Transcribed Image Text:Line Item Description
Cash balance according to bank statement
Add: Outstanding checks
Deduct: Deposit in transit on July 31
Deduct: Bank error in charging check as $50 instead of $500
Total deductions
Adjusted balance
Cash balance according to company's records
Adjustments:
Add: Note collected by bank, including $110 interest
Add: Error in recording check by Stone Systems
Total additions
Deduct: Bank service charges
Adjusted balance
20Y5 July 31
July 31
Cash
Notes Receivable
Interest Revenue
Accounts Payable-Holland Co.
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.
Miscellaneous Expense
Amount Amount
$11,180
4,020
Cash
4,190
00
000000
000
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