Bank Reconciliation and Entries The cash account for Pala Me

Bank Reconciliation and Entries The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $12,020. The bank statement indicated a balance of $13,980 on June 0, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: a. Checks outstanding totaled $5,030. b. A deposit of $5,240, representing receipts of June 30, had been made too late to appear on the bank statement. c. The bank collected $2,730 on a $2,590 note, including interest of $140 d. A check for $770 returned with the statement had been incorrectly recorded by Pala Medical Co. as $700. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account. e. A check drawn for $50 had been erroneously charged by the bank as $500. f. Bank service charges for June amounted to $40 Required: 1. Prepare a bank reconciliation. Pala Medical Co. Bank Reconciliation June 30, 20Y1 Cash balance according to bank statement Adjustments: Total adjustments Adjusted balance Cash balance according to company\'s records Adjustments:

Solution

Solution:

a) Preparing the Bank Reconciliation:

Pala Medical Co.

Bank Reconciliation

June 30, 20Y1

2) Preparing the Journal Entries:

Pala Medical Co. Bank Reconciliation June 30, 20Y1
Cash balance according to bank statement	$13,980
Add: Deposit of June 30, not recorded by bank	$5,240
Add: Bank error in charging check as $500 instead of $50	$450	$5,690
		$19,670
Deduct: Outstanding checks	($5,030)
Adjusted balance	$14,640
Cash balance according to company’s records	$12,020
Add proceeds of note collected	$2,730
	$14,750
Deduct error in recording check by Pala medical Co.	$70
Deduct bank service charges	$40	($110)
Adjusted balance		$14,640