Cash Account For American Medical Co. At April 30 Indica ✓ Solved
The Cash Account For American Medical Co At April 30 Indica
1. Prepare a bank reconciliation for American Medical Co. as of April 30.
2. Journalize the necessary entries for American Medical Co. The accounts have not been closed.
3. If a balance sheet is prepared for American Medical Co. on April 30, what amount should be reported as cash?
4. Prepare a bank reconciliation for Brentwood Bike Co. as of May 31.
5. Journalize the necessary entries for Brentwood Bike Co. The accounts have not been closed.
6. If a balance sheet is prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
7. Prepare a bank reconciliation for Sunshine Interiors as of July 31 and journalize the necessary entries.
8. Determine the amount of Cash that should appear on the balance sheet as of July 31, and how to correct an error related to a canceled check.
Paper For Above Instructions
Bank Reconciliation for American Medical Co. as of April 30
To prepare the bank reconciliation for American Medical Co., we need to compare the bank statement balance with the company's cash account balance and adjust for any discrepancies.
Bank Statement Balance
Bank statement balance as of April 30: $388,600
Adjustments
- Outstanding checks: $61,280
- Deposit in transit: $42,500
- Bank collection on notes: $42,000
- Check recording error: -$6,840 (this is corrected as $7,600 - $760)
- Bank error in charging $240 check as $420: +$180
- Bank service charges: -$145
Adjusted Bank Balance Calculation
Adjusted Bank Balance = Bank Statement Balance - Outstanding Checks + Deposits in Transit + Bank Collection - Check Recording Error + Bank Error + Bank Service Charges
Adjusted Bank Balance = $388,600 - $61,280 + $42,500 + $42,000 - $6,840 + $180 - $145 = $405,015
Company's Cash Account Balance
Company's cash account balance as of April 30: $334,985.
Adjusted cash balance from the company's records should match the bank's adjusted balance.
Journal Entries for American Medical Co.
To Record Bank Service Charges
Debit: Bank Service Charges Expense: $145
Credit: Cash: $145
To Record Check Error
Debit: Accounts Payable: $6,840
Credit: Cash: $6,840
To Record Bank Collection on Note
Debit: Cash: $42,000
Credit: Notes Receivable: $40,000
Credit: Interest Revenue: $2,000
Cash Balance on Balance Sheet for American Medical Co.
Reported Cash Amount as of April 30: $405,015.
Bank Reconciliation for Brentwood Bike Co. as of May 31
Bank Statement Balance
Bank statement balance as of May 31: $43,525.
Adjustments
- Outstanding checks: $6,440
- Deposit in transit: $1,850
- Bank collection on notes: $5,250
- Check recording error: -$840 (this is corrected as $930 - $390)
- Bank service charges: -$30
Adjusted Bank Balance Calculation
Adjusted Bank Balance = $43,525 - $6,440 + $1,850 + $5,250 - $840 - $30 = $43,315.
Journal Entries for Brentwood Bike Co.
To Record Bank Service Charges
Debit: Bank Service Charges Expense: $30
Credit: Cash: $30
To Record Bank Collection on Note
Debit: Cash: $5,250
Credit: Notes Receivable: $5,000
Credit: Interest Revenue: $250
Cash Balance on Balance Sheet for Brentwood Bike Co.
Reported Cash Amount as of May 31: $43,315.
Bank Reconciliation for Sunshine Interiors as of July 31
Bank Statement Balance
Bank statement balance as of July 31: $9,422.80
Adjustments
- Outstanding checks: $1,461.10 (sum of checks 614, 621 and 628)
- Deposits in transit: $1,139.40
- Bank service charges: -$27.70
Adjusted Bank Balance Calculation
Adjusted Bank Balance = $9,422.80 + $1,139.40 - $1,461.10 - $27.70 = $9,073.40.
Journal Entries for Sunshine Interiors
To Record Bank Service Charges
Debit: Bank Service Charges Expense: $27.70
Credit: Cash: $27.70
Cash Amount on Balance Sheet for Sunshine Interiors
Reported Cash Amount as of July 31: $9,073.40.
Correcting Entry for Canceled Check
To correct the bank error of a $180 check recorded as $1,800, the company should add $1,620 to its cash balance in the next journal entry.
References
- Harrison, W. T., & Horngren, C. T. (2018). Financial Accounting. Pearson.
- Weil, R. L., & Schipper, K. (2019). Financial Accounting: An Introduction to Concepts, Methods, and Uses. Cengage Learning.
- Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2020). Financial Accounting. John Wiley & Sons.
- Spiceland, J. D., Nelson, D. W., & Kensinger, J. W. (2019). Intermediate Accounting. McGraw-Hill Education.
- Needles, B. E., & Powers, M. (2020). Financial Accounting. Cengage Learning.
- Anthony, R. N., Hawkins, D. F., & Merchant, A. D. (2019). Accounting: Texts and Cases. McGraw-Hill Education.
- Palmer, K. (2021). Accounting for Decision Making. Business Expert Press.
- Haka, S. F., & Krull, G. (2020). Introduction to Financial Accounting. John Wiley & Sons.
- Wild, J. J., & Shaw, K. W. (2020). Financial Accounting. Pearson.
- FASB. (2021). Accounting Standards Codification. Financial Accounting Standards Board.