PR 7-4A Bank reconciliation and entries
The cash account for Fit Bike Co. at August 1, 2014, indicated a balance of $12,190.
During August, the total cash deposited was $28,100 and checks written totaled $33,010.
The bank statement indicated a balance of $12,550 on August 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
a. Checks outstanding totaled $7,440.
b. A deposit of $2,880, representing receipts of August 31, had been made too late to appear on the bank statement.
c. The bank had collected for Fit Bike Co. $2,080 on a note left for collection. The face of the note was $2,000.
d. A check for $580 returned with the statement had been incorrectly charged by the bank as $850.
e. A check for $640 returned with the statement had been recorded by Fit Bike Co. as $460. The check was for the payment of an obligation to Brown Co. on account.
f. Bank service charges for August amounted to $20.
g. A check for $900 from Murdock Co. was returned by the bank due to insufficient funds.
Instructions
1. Prepare a bank reconciliation as of August 31.
2. Journalize the necessary entries. The accounts have not been closed.
3. If a balance sheet were prepared for Fit Bike Co. on August 31, 2014, what amount should be reported as cash?