Sunshine Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours

Sunshine Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of July 31 have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account.






























































BANK RECONCILIATION FOR PRECEDING MONTH (DATED JUNE 30):
Cash balance according to bank statement . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,422.80
Add deposit of June 30, not recorded by bank . . . . . . . . . . . . . . . . . . . . . . . 780.80
$10,203.60
Deduct outstanding checks:
No. 580 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $310.10
No. 602 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.50
No. 612 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.50
No. 613 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137.50 625.60
Adjusted balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,578.00
Cash balance according to company’s records . . . . . . . . . . . . . . . . . . . . . . . $ 9,605.70
Deduct service charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.70
Adjusted balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,578.00
CASH ACCOUNT:
Balance as of July 1 $ 9,578.00
Cash Receipts for Month of July 6,465.42
Duplicate Deposit Tickets:
Date and amount of each deposit in July:
Date Amount Date Amount Date Amount
July 2 $569.50 July 12 $580.70 July 23 $ 713.45
5 701.80 16 600.10 26 601.50
9 819.24 19 701.26 31 1,177.87
CHECKS WRITTEN:
Number and amount of each check issued in July:
Check No. Amount Check No. Amount Check No. Amount
614 $243.50 621 $309.50 628 $ 837.70
615 350.10 622 Void 629 329.90
616 279.90 623 Void 630 882.80
617 395.50 624 707.01 631 1,081.56
618 435.40 625 158.63 632 325.40
619 320.10 626 550.03 633 310.08
620 238.87 627 381.73 634 241.71
Total amount of checks issued in July $8,379.42
JULY BANK STATEMENT:
AMERICAN NATIONAL BANK
 OF DETROIT
DETROIT, MI 48201-2500 (313)933-8547
MEMBER FDIC
ACCOUNT NUMBER
FROM 7/01/20– TO 7/31/20–
BALANCE 9,422.80
DEPOSITS 6,086.35
WITHDRAWALS 7,656.74
OTHER DEBITS
AND CREDITS 3,749.00CR
NEW BALANCE 11,601.41
9
20
4 SUNSHINE INTERIORS
* – – – – – CHECKS AND OTHER DEBITS – – – – – * – DEPOSITS – * – DATE – * – BALANCE– *
No.580 310.10 No.612 92.50 780.80 07/01 9,801.00
No.602 85.50 No.614 243.50 569.50 07/03 10,041.50
No.615 350.10 No.616 279.90 701.80 07/06 10,113.30
No.617 395.50 No.618 435.40 819.24 07/11 10,101.64
No.619 320.10 No.620 238.87 580.70 07/13 10,123.37
No.621 309.50 No.624 707.01 MS 4,000.00 07/14 13,106.86
No.625 158.63 No.626 550.03 MS 160.00 07/14 12,558.20
No.627 318.73 No.629 329.90 600.10 07/17 12,509.67
No.630 882.80 No.631 1,081.56 NSF 375.00 07/20 10,170.31
No.632 325.40 No.634 241.71 701.26 07/21 10,304.46
 731.45 07/24 11,035.91
 601.50 07/28 11,637.41
 SC 36.00 07/31 11,601.41
EC –– ERROR CORRECTION OD –– OVERDRAFT
MS –– MISCELLANEOUS PS –– PAYMENT STOPPED
NSF –– NOT SUFFICIENT FUNDS SC –– SERVICE CHARGE
* * * * * * * * *
THE RECONCILEMENT OF THIS STATEMENT WITH YOUR RECORDS IS ESSENTIAL.
ANY ERROR OR EXCEPTION SHOULD BE REPORTED IMMEDIATELY.




Instructions
1. Prepare a bank reconciliation as of July 31. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable.
2. Journalize the necessary entries. The accounts have not been closed.
3. What is the amount of Cash that should appear on the balance sheet as of July 31?
4. Assume that a canceled check for $180 has been incorrectly recorded by the bank as $1,800. Briefly explain how the error would be included in a bank reconciliation and how it should be corrected.


Answers:










































1.

SUNSHINE INTERIORS
Bank Reconciliation
July 31, 20—
Cash balance according to bank statement $11,601.41
Add deposit of July 31, not recorded by bank 1,177.87
$12,779.28
Deduct outstanding checks:
No. 613 $ 137.50
628 837.70
633 310.08 1,285.28
Adjusted balance $11,494.00
Cash balance according to company’s records* $ 7,664.00
Add proceeds of note collected by bank:
Principal $4,000.00
Interest 160.00
Add error in recording July 23 deposit 18.00
Add error in recording Check No. 627 63.00 4,241.00
$11,905.00
Deduct: Check returned because of insufficient funds $ 375.00
Service charges 36.00 411.00
Adjusted balance $11,494.00
* Balance per cash in bank account, July 1……………… $ 9,578.00
Add July receipts…………………………………………… 6,465.42
Deduct July disbursements……………………………… (8,379.42)
Balance per cash in bank account, July 31…………… $ 7,664.00
2.

Cash 4,241.00
Notes Receivable 4,000.00
Interest Revenue 160.00
Sales 18.00
Accounts Payable 63.00
Accounts Receivable 375.00
Miscellaneous Expense 36.00
Cash 411.00
3. $11,494.00
4. The error of $1,620 ($1,800 – $180) in the canceled check should be added to the
“balance according to bank statement” on the bank reconciliation. The canceled
check should be presented to the bank, with a request that the bank balance be
corrected.