Problem 422 Bank reconciliation and adjustments to the cash

Problem 4-22 Bank reconciliation and adjustments to the cash account

The following information is available for Sunset Valley Hotel for July 2014:

Other Information

1.Check no. 2350 was outstanding from June.

2.The credit memo was for collection of notes receivable.

3.All checks were paid at the correct amount.

4.The debit memo was for printed checks.

5.The June 30 bank reconciliation showed a deposit in transit of $1,102.

6.The unadjusted Cash account balance at July 31 was $13,200.

Required

a.Prepare the bank reconciliation for Sunset Valley Hotel at the end of July.

b.Explain how the adjustments described above affect the cash account.

Bank Statement STATE BANK Bolta Vista, NV 10001 Sunset Valley Hotel 10 Main Street Bolta Vista, NV 10001 Beginning balance 6/30/2014 Total deposits and other credits Total checks and other debits Ending balance 7/31/2014 Checks and Debits Check No. Amount 2350 $3,761 2351 1,643 2352 8,000 2364 2,894 2355 1,401 2357 6,187 DM 16 Account number 12-4567 July 31, 2014 $ 9,031 29,800 23,902 14,929 Deposits and Credits Date Amount July $1,102 July 6,498 July 4,929 July 6,174 5,963 July 30 2,084 CM 3,050 July The following is a list of checks and deposits recorded on the books of the Sunset Valley Hotel for July 2014: Date Check No. 14 10 July July July July July July July Amount of Check $1,643 8,000 1,500 2,894 1,401 745 6,187 2351 2352 2353 2354 2355 2356 2357 21 Date July July July July July July Amount of Deposit $6,498 4,929 6,174 5,963 2,084 3,550 26 20 22 30

Solution

a. Unadjusted Bank balance july, 2014 14,929 Add: Deposit in transit 3,550 Less: Outstanding cheque no. 2353 -1500 no. 2356 -745 True cash balance for july, 2014 16,234 Unadjusted book balance 13,200 Add: credit memo for collection 3050 less: debit memo for printed -16 True cash balance for july, 2014 16,234 b. 1. this do not affect cash , as it was outstanding from june 2. cash is incraesed 3. do not affect 4. cash is decreased, as debit memo 5. do not affect, as june reco already reflects 6. do not affect