29 Jun Question Aztec Interiors deposits all cash rec
Question
Aztec 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 May 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.
CASH ACCOUNT:
Balance as of May 1 $9,578.00
CASH RECEIPTS FOR MONTH OF May $5,948.81
DUPLICATE DEPOSIT TICKETS:
Date and amount of each deposit in May:
Date Amount Date Amount Date Amount
May 2 $569.50 May 12 $580.70 May 23 $ 331.45
5 701.80 16 600.10 26 601.50
9 819.24 19 701.26 31 1,043.26
CHECKS WRITTEN:
Number and amount of each check issued in May:
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 62.40
619 320.10 626 550.03 633 310.08
620 328.87 627 318.73 634 503.30
Total amount of checks issued in May $8,405.01
BANK RECONCILIATION FOR PRECEDING MONTH (DATED APRIL 30):
Cash balance according to bank statement $ 9,422.80
Add deposit of April 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
Instructions
1. Prepare a bank reconciliation as of May 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 except for the note receivable
of $4,000 and interest of $160 collected on May 14. All checks are written to
satisfy accounts payable.
2. Illustrate the effects on the accounts and financial statements of the bank
reconciliation.
3. What is the amount of Cash that should appear on the balance sheet as of
May 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.
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