Question

e cash account for Highlander Diamond Co. on April 1, 20Y5, indicated a balance of $35,400. During April, the total cash deposited was $120,255, and checks written totaled $109,200. The bank statement indicated a balance of $60,927 on April 30, 20Y5. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: Checks outstanding totaled $21,450. A deposit of $13,913, representing receipts of April 30, had been made too late to appear on the bank statement. A check for $710 had been incorrectly charged by the bank as $170. A check for $220 returned with the statement had been recorded by Highlander Diamond Co. as $2,200. The check was for the payment of an obligation to Dirt Dog Inc. on account. The bank had collected for Highlander Diamond $6,480 on a note left for collection. The face of the note was $6,000. Bank service charges for April amounted to $115. A check for $1,950 from Fly Ball Co. was returned by the bank because of insufficient funds.

Answer 1

The Cash Adjustment and Bank Reconciliation Statement for Highlander Diamond Co. as follows:

Cash Adjustment on April 30, 20Y5

Balance as per cash book $46,455

Accounts Payable                 $1,980

Accounts Receivable          $6,000

Interest Revenue                   $480

Accounts Receivable

 (Fly Ball Co.)                     ($1,950)

Bank Service Charges           ($115)

Adjusted cash balance  $52,850

Bank Reconciliation Statement on April 30, 20Y5

Balance as per bank statement          $60,927

Add Deposit in transit                           $13,913

Over-charged check                               ($540)

Checks outstanding totaled              ($21,450)

Balance as per adjusted cash          $52,850

Data Analysis:

Beginning Cash balance $35,400

Total cash deposited $120,255

Total checks written $109,200

Ending Cash balance = $46,455 ($35,400 + $120,255 - $109,200)

Bank Statement balance on April 30 = $60,927

Total checks outstanding $21,450

Deposit in transit $13,913

Overcharged check $540 ($710 - $170)

Cash Book Adjustments:

Cash $1,980 Accounts Payable $1,980 ($2,200 - $220)

Cash $6,480 Accounts Receivable $6,000 Interest Revenue $480

Bank Service Charges $115 Cash $115

Accounts Receivable (Fly Ball Co.) $1,950 Cash $1,950

Thus, the correct cash account balance should be $52,850 after the reconciliation with the bank statement.

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