Financial Accounting: An Integrated Statements Approach, 2nd Edition

d. A check for $120 returned with the statement had been incorrectly charged by the bank as

$1,200.

e. A check for $318 returned with the statement had been recorded by Seal-Tek Co. as $138.

The check was for the payment of an obligation to Kenyon Co. on account.

f. Bank service charges for December amounted to $30.

g. A check for $636 from Fontana Co. was returned by the bank because of insufficient

funds.

Instructions

1. Prepare a bank reconciliation as of December 31.


2. Journalize the necessary entries. The accounts have been closed.

Heritage Furniture Company deposits all cash receipts each Wednesday and Friday in a night

depository, after banking hours. The data required to reconcile the bank statement as of

November 30 have been taken from various documents and records and are reproduced as fol-

lows. The sources of the data are printed in capital letters. All checks were written for payments

on account.

NOVEMBER BANK STATEMENT:

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

Alternate Problem

7-4B

Bank reconciliation and

entries

Goals4, 5

1. Adjusted balance:
   $10,322.02
   PAGE 1

AMERICAN NATIONAL BANK

OF DETROIT

DETROIT, MI 48201-2500 (313)555-8547

MEMBER FDIC

ACCOUNT NUMBER

FROM11/01/20– TO11/30/20–

BALANCE 7,447.20

DEPOSITS 8,691.77

WITHDRAWALS 7,345.91

OTHER DEBITS

AND CREDITS 2,298.70CR

NEW BALANCE 11,091.76

9

20

HERITAGE FURNITURE COMPANY 4

*– – – CHECKS AND OTHER DEBITS – – – *– – DEPOSITS – – *– DATE – *– – BALANCE– – *

No.731 162.15 No.738 251.40 690.25 11/01 7,723.90

No.739 60.55 No.740 237.50 1,080.50 11/02 8,506.35

No.741 495.15 No.742 501.90 854.17 11/04 8,363.47

No.743 671.30 No.744 506.88 840.50 11/09 8,025.79

No.745 117.25 No.746 298.66 MS 2,500.00 11/09 10,109.88

No.748 450.90 No.749 640.13 MS 125.00 11/09 9,143.85

No.750 276.77 No.751 299.37 896.61 11/11 9,464.32

No.752 537.01 No.753 380.95 882.95 11/16 9,429.31

No.754 449.75 No.756 113.95 1,606.74 11/18 10,472.35

No.757 407.95 No.760 486.39 897.34 11/23 10,475.35

942.71 11/25 11,418.06

NSF 291.90 11/28 11,126.16

SC 34.40 11/30 11,091.76

EC –– ERROR CORRECTION OD –– OVERDRAFT

MS –– MISCELLANEOUS PS –– PAYMENT STOPPED

NSF –– NOT SUFFICIENT FUNDS SC –– SERVICE CHARGE

* * * * * * * * *

THE RECONCILEMENT OF THIS STATEMENT WITH YOUR RECORDS IS ESSENTIAL.

ANY ERROR OR EXCEPTION SHOULD BE REPORTED IMMEDIATELY.