P7-14
(Page 389) -El Gato Painting Company
El Gato
Painting Company maintains a checking account at American Bank. Bank statements
are prepared at the end of each month. The November 30, 2011, reconciliation of
the bank balance is as follows:
Balance per bank, November 30 $3,231
Add: Deposits outstanding 1,200
less: Checks outstanding
#363 $123
#365 201
#380 56
#381 86
#382 340 (806)
Adjusted balance per bank,
November 30 $3,625
The company's general ledger
checking account showed the following for December:
Balance December 1 $3,625
Receipts 42,650
Disbursements (41,853)
Balance, December $4,422
The December bank statement
contained the following information:
Balance, December 1 $3,231
Deposits 43,000
Checks processed (41,918)
Service charges (22)
NSF checks (440)
Balance, December 31 $3,851)
The checks that were processed by
the bank in December include all of the outstanding checks at the end of
November except for check #365. In addition, there are some December checks
that had not been processed by the bank by the end of the month. Also, you
discover that check #411 for $320 was correctly recorded by the bank but was
incorrectly recorded on the books as a $230 disbursement for advertising
expense. Included in the bank's deposits is a $1,300 deposit incorrectly
credited to the company's account. The deposit should have been posted to the
credit of the Los Gatos Company. The NSF checks have not been redeposited and
the company will seek payment from the customers involved.
Required:
1. Prepare a bank reconciliation
for the El Gato checking account at December 31, 2011
2. Prepare any necessary
adjusting journal entries indicated.
TUTORIAL
Problem 7-14
Requirement 1
Step 1: Bank
Balance to Corrected Balance
|
Balance
per bank statement
|
$3,851
|
|
Add: Deposits outstanding
|
2,150 (1)
|
|
Deduct:
|
|
|
Bank error - deposit incorrectly
|
|
|
Credited to company account
|
(1,300)
|
