Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 7 Sarbanes-Oxley, Internal Control, and Cash 337

Using the data presented in Exercise 7-18, journalize the entry or entries that should be made by

the company.

Accompanying a bank statement for Covershot Company is a credit memorandum for $15,300,

representing the principal ($15,000) and interest ($300) on a note that had been collected by the

bank. The company had been notified by the bank at the time of the collection but had made no

entries. Journalize the entry that should be made by the company to bring the accounting

records up to date.

An accounting clerk for Dubitzky Co. prepared the following bank reconciliation:

Dubitzky Co.

Bank Reconciliation

July 31, 2008

Cash balance according to company’s records $ 8,100.75

Add: Outstanding checks $6,557.12

Error by Dubitzky Co. in recording Check No. 4217 as

$6,315 instead of $3,615 2,700.00

Note for $3,600 collected by bank, including interest 3,672.00 12,929.12

$21,029.87

Deduct: Deposit in transit on July 31 $7,150.00

Bank service charges 20.00 7,170.00

Cash balance according to bank statement $13,859.87

a. From the data in the above bank reconciliation, prepare a new bank reconciliation for

Dubitzky Co., using the format shown in the illustrative problem.

b. If a balance sheet were prepared for Dubitzky Co. on July 31, 2008, what amount should

be reported for cash?

Identify the errors in the following bank reconciliation. Prepare a corrected bank reconciliation.

Imaging Services Co.

Bank Reconciliation

For the Month Ended April 30, 2008

Cash balance according to bank statement $ 9,767.76

Add outstanding checks:

No. 821 $ 345.95

839 272.75

843 759.60

844 501.50 1,879.80

$11,647.56

Deduct deposit of April 30, not recorded by bank 1,010.06

Adjusted balance $ 9,637.50

Cash balance according to company’s records $ 1,118.32

Add: Proceeds of note collected by bank:

Principal $8,000.00

Interest 280.00 $8,280.00

Service charges 18.00 8,298.00

$ 9,416.32

Deduct: Check returned because of

insufficient funds $ 752.30

Error in recording April 10 deposit of $4,850

as $4,580 270.00 1,022.30

Adjusted balance $ 8,394.02

Exercise 7-19

Entries for bank reconciliation

Goals4, 5

Exercise 7-20

Entries for note collected by
bank

Goals4, 5

Exercise 7-21

Bank reconciliation

Goals4, 5

Adjusted balance: $14,452.75

Exercise 7-22

Bank reconciliation

Goals4, 5

Corrected adjusted
balance: $8,898.02