Financial Accounting: An Integrated Statements Approach, 2nd Edition

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

PAGE 1

AMERICAN NATIONAL BANK

OF DETROIT

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

MEMBER FDIC

ACCOUNT NUMBER

FROM 5/01/20– TO 5/31/20–

BALANCE 10,422.80

DEPOSITS 6,086.35

WITHDRAWALS 7,514.11

OTHER DEBITS

AND CREDITS 5,150.50CR

NEW BALANCE 14,145.54

9

20

ROCKY MOUNTAIN INTERIORS 4

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

No.580 310.10 No.612 92.50 780.80 05/01 10,801.00

No.613 137.50 No.614 243.50 569.50 05/03 10,989.50

No.615 350.10 No.616 279.90 701.80 05/06 11,061.30

No.617 395.50 No.618 435.40 819.24 05/11 11,049.64

No.619 320.10 No.620 238.87 580.70 05/13 11,071.37

No.621 309.50 No.624 707.01 MS 5,000.00 05/14 15,054.86

No.625 158.63 No.626 550.03 MS 400.00 05/14 14,746.20

No.627 318.73 No.629 329.90 600.10 05/17 14,697.67

No.630 882.80 No.631 1,081.56 NSF 225.40 05/20 12,507.91

No.632 62.40 No.633 310.08 701.26 05/21 12,836.69

731.45 05/24 13,568.14

601.50 05/28 14,169.64

SC 24.10 05/31 14,145.54

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.

CASH RECEIPTS FOR MONTH OF MAY $6,630.60

DUPLICATE DEPOSIT TICKETS:

Date and amount of each deposit in May:

Date Amount Date Amount Date Amount

May 2 $569.50 May 12 $580.70 May 23 $ 731.45

5 701.80 16 600.10 26 601.50

9 819.24 19 701.26 31 1,325.05

Instructions

1. Prepare a bank reconciliation as on May 31. If errors in recording deposits or checks are dis-
   covered, assume that the errors were made by the company. Assume that all deposits are
   from cash sales. All checks are written to satisfy accounts payable.


2. Journalize the necessary entries. The accounts have not been closed.


3. What is the amount of cash that should appear on the balance sheet as of May 31?


4. Assume that a canceled check for $1,375 has been incorrectly recorded by the bank as $1,735.
   Briefly explain how the error would be included in a bank reconciliation and how it should
   be corrected.

MAY BANK STATEMENT: