Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 7 Sarbanes-Oxley, Internal Control, and Cash 345

CASH ACCOUNT
Balance as of November 1 $7,317.40

CASH RECEIPTS FOR MONTH OF NOVEMBER $8,651.58

DUPLICATE DEPOSIT TICKETS:
Date and amount of each deposit in November:

Date Amount Date Amount Date Amount

Nov. 1 $1,080.50 Nov. 10 $ 896.61 Nov. 22 $ 537.34
3 854.17 15 882.95 24 942.71
8 840.50 17 1,606.74 29 1,010.06

CHECKS WRITTEN:
Number and amount of each check issued in November:

Check No. Amount Check No. Amount Check No. Amount

740 $237.50 747 Void 754 $ 449.75

741 495.15 748 $450.90 755 272.75

742 501.90 749 640.13 756 113.95

743 671.30 750 276.77 757 407.95

744 506.88 751 299.37 758 259.60

745 117.25 752 337.01 759 901.50

746 298.66 753 380.95 760 486.39

Total amount of checks issued in November $8,105.66

BANK RECONCILIATION FOR PRECEDING MONTH:

Heritage Furniture Company

Bank Reconciliation

October 31, 20—

Cash balance according to bank statement $7,447.20
Add deposit for October 31, not recorded by bank 690.25

$8,137.45
Deduct outstanding checks:
No. 731 $162.15
736 345.95
738 251.40
739 60.55 820.05

Adjusted balance $7,317.40

Cash balance according to company’s records $7,352.50
Deduct service charges 35.10

Adjusted balance $7,317.40

Instructions

1. Prepare a bank reconciliation as of November 30. If errors in recording deposits or checks
   are discovered, 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 November 30?


4. Assume that a canceled check for $580 has been incorrectly recorded by the bank as $850.
   Briefly explain how the error would be included in a bank reconciliation and how it should
   be corrected.