La Casa Interiors Deposits All Cash Receipts Each Wednesday
La Casa Interiors Deposits All Cash Receipts Each Wednesday and Friday
La Casa 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. The sources of the data are printed in capital letters. All checks were written for payments on account. Instructions: Hide 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. When required, enter amounts in dollars and cents.
Bank Reconciliation as of July 31, 20--
Cash balance according to bank statement: $__________
Add: Deposits in transit: $__________
Less: Outstanding checks: $__________
Adjusted bank balance: $__________
Cash balance according to books: $__________
Less: Errors in recording checks: $__________
Plus: Errors in recording deposits: $__________
Adjusted book balance: $__________
Journalize the necessary entries
Record the adjusting entries based on the reconciling items identified above. When required, enter amounts in dollars and cents. When no entry is needed, leave the box blank or enter "0".
Determine Cash on Balance Sheet as of July 31
The amount of cash that should appear on the balance sheet is the adjusted book balance calculated from the reconciliation. Enter the amount in dollars and cents: $__________
Handling Bank Error in Check Recording
A canceled check for $325 has been incorrectly recorded by the bank as $3,250. This error will be included in the bank reconciliation process as an adjustment to the bank statement balance. The incorrect recording can be corrected by requesting the bank to amend the record. Specifically, the bank's error would be addressed as a deduction from the bank statement balance during reconciliation. The correction involves the bank adjusting the error, which ultimately affects the bank side of the reconciliation.
Correcting the Error of the Bank
The correction involves requesting that the bank correct the erroneous entry. The appropriate journal entry to reflect the correction would be to deduct $2,925 (the difference between $3,250 and $325) from the bank's recorded amount to rectify the mistake. Alternatively, if this correction is to be reflected in the company's books, a journal entry would be made to adjust the cash account accordingly. Such an entry would be to deduct $2,925 from cash to match the corrected bank statement figure.
Final Notes
Ensuring accuracy in financial records, especially when reconciling bank statements, is vital for maintaining reliable financial reporting. Regularly performing bank reconciliations helps identify errors, prevent fraud, and ensure consistency between the company's books and bank records. Attention to errors, such as incorrect recording of checks, and timely correction of these issues is crucial for accurate financial analysis and reporting.
References
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