FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
The cash account for American Medical Co. at April 30 indicated a balance of $84,457. The bank statement indicated a balance of $127,190 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:
A. Checks outstanding totaled $33,310.
B. A deposit of $17,610, representing receipts of April 30, had been made too late to appear on the bank statement.
C. The bank collected $28,248 on a $26,400 note, including interest of $1,848.
D. A check for $1,100 returned with the statement had been incorrectly recorded by American Medical Co. as $110. The check was for the payment of an obligation to Targhee Supply Co. for a purchase on account.
E. A check drawn for $680 had been erroneously charged by the bank as $860.
F. Bank service charges for April amounted to $45.
 
  Instructions
1. Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Deduct:” or “Add:” will automatically appear if it is required.
2. Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles.
3. If a balance sheet is prepared for American Medical Co. on April 30, what amount should be reported as cash?
 
 
Chart of Accounts
 
 
CHART OF ACCOUNTS
American Medical Co.
General Ledger
  ASSETS
110 Cash
111 Petty Cash
120 Accounts Receivable
131 Notes Receivable
141 Merchandise Inventory
145 Office Supplies
146 Store Supplies
151 Prepaid Insurance
181 Land
191 Office Equipment
192 Accumulated Depreciation-Office Equipment
193 Store Equipment
194 Accumulated Depreciation-Store Equipment
  LIABILITIES
211 Accounts Payable-Targhee Supply Co.
221 Notes Payable
222 Interest Payable
231 Salaries Payable
241 Sales Tax Payable
  EQUITY
310 Owner, Capital
311 Owner, Drawing
312 Income Summary
  REVENUE
410 Sales
610 Interest Revenue
  EXPENSES
510 Cost of Merchandise Sold
515 Credit Card Expense
516 Cash Short and Over
520 Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Insurance Expense
534 Office Supplies Expense
535 Rent Expense
536 Repairs Expense
537 Selling Expenses
538 Store Supplies Expense
561 Depreciation Expense-Office Equipment
562 Depreciation Expense-Store Equipment
590 Miscellaneous Expense
710 Interest Expense
 
 
Amount Descriptions
 
 
Amount Descriptions
 
Bank error in charging check as $680 instead of $860  
Bank error in charging check as $860 instead of $680  
Bank service charges  
Check for $860 returned because of insufficient funds  
Deposit of April 30, not recorded by bank  
Error in recording check  
Error in recording April 30 deposit  
Outstanding checks  
Note and interest collected by bank  
2. Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 1
 
JOURNAL
ACCOUNTING EQUATION
 
  DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1
 
 
 
 
 
 
 
 
2
 
 
 
 
 
 
 
 
3
 
 
 
 
 
 
 
 
4
 
 
 
 
 
 
 
 
5
 
 
 
 
 
 
 
 
6
 
 
 
 
 
 
 
 
 
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