Posted: June 10th, 2022

Accounting Problem

Check the attached word document.
accountingbusiness
ATTACHED FILE(S)
Ch. 7
The
cash
account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $166,436. The
bank statement
indicated a balance of $195,688 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

a.

Checks outstanding totaled $19,427.

b.

A deposit of $12,300, representing receipts of June 30, had been made too late to appear on the bank statement.

c.

The bank collected $26,500 on a $25,000 note, including interest of $1,500.

d.

A check for $4,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $400. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.

e.

A check drawn for $195 had been erroneously charged by the bank as $915.

f.

Bank service charges for June amounted to $55.
Required:

1.

Prepare a bank reconciliation.

2.

Journalize the necessary entries.

3.

If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?

CHART OF ACCOUNTS

Pala Medical Co.

General Ledger

ASSETS

110

Cash

111

Petty Cash

120

Accounts Receivable

131

Notes Receivable

141

Merchandise Inventory

145

Office Supplies

146

Store Supplies

151

Prepaid Insurance

181

Land

191

Office Equipment

192

Accumulated Depreciation-Office Equipment

193

Store Equipment

194

Accumulated Depreciation-Store Equipment

LIABILITIES

211

Accounts Payable-Skyline Supply Co.

221

Notes Payable

222

Interest Payable

231

Salaries Payable

241

Sales Tax Payable

EQUITY

310

Common Stock

311

Retained Earnings

312

Dividends

REVENUE

410

Sales

610

Interest Revenue

EXPENSES

510

Cost of Goods Sold

515

Credit Card Expense

516

Cash Short and Over

520

Salaries Expense

531

Advertising Expense

532

Delivery Expense

533

Insurance Expense

534

Office Supplies Expense

535

Rent Expense

536

Repairs Expense

537

Selling Expenses

538

Store Supplies Expense

561

Depreciation Expense-Office Equipment

562

Depreciation Expense-Store Equipment

590

Miscellaneous Expense

710

Interest Expense
Labels and Amount Descriptions

Labels

For the Month Ended June 30, 20Y1

June 30, 20Y1

Amount Descriptions

Adjusted balance

Bank error in charging check as $915 instead of $195

Bank service charges

Deposit in transit on June 30

Error in recording check

Note collected by bank, including $1,500 interest

Outstanding checks

Total additions

Total deductions

Bank Reconciliation
1. Prepare a bank reconciliation.
Bank Reconciliation Instructions

Pala Medical Co.

Bank Reconciliation

1

Cash balance according to bank statement

2

3

4

5

6

7

8

Cash balance according to company’s records

9

10

11

12

13

General Journal
2. Journalize the necessary entries.
General Journal Instructions
PAGE 1
JOURNAL
ACCOUNTING EQUATION

DATE

DESCRIPTION

POST. REF.

DEBIT

CREDIT

ASSETS

LIABILITIES

EQUITY

1

2

3

4

5

6

Final Question
3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?
Part 2
The
cash
account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $5,140. During October, the total cash deposited was $39,175, and checks written totaled $40,520. The
bank statement
indicated a balance of $8,980 on October 31, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

a.

Checks outstanding totaled $3,260.

b.

A deposit of $2,450 representing receipts of October 31 had been made too late to appear on the bank statement.

c.

The bank had collected for Coastal Bike Co. $5,300 on a note left for collection. The face of the note was $5,000.

d.

A check for $460 returned with the statement had been incorrectly charged by the bank as $640.

e.

A check for $430 returned with the statement had been recorded by Coastal Bike Co. as $340. The check was for the payment of an obligation to Rack Pro Co. on account.

f.

Bank service charges for October amounted to $50.

g.

A check for $605 from Bay View Condos was returned by the bank due to insufficient funds.

Required:

1.

Prepare a bank reconciliation as of October 31, 20Y9.

2.

Journalize the necessary entries.

3.

If a balance sheet were prepared for Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash?
Chart of Accounts

CHART OF ACCOUNTS

Coastal Bike Co.

General Ledger

ASSETS

110

Cash

111

Petty Cash

112

Accounts Receivable-Bay View Condos

131

Notes Receivable

141

Merchandise Inventory

145

Office Supplies

146

Store Supplies

151

Prepaid Insurance

181

Land

191

Office Equipment

192

Accumulated Depreciation-Office Equipment

193

Store Equipment

194

Accumulated Depreciation-Store Equipment

LIABILITIES

211

Accounts Payable-Rack Pro Co.

221

Notes Payable

222

Interest Payable

231

Salaries Payable

241

Sales Tax Payable

EQUITY

310

Common Stock

311

Retained Earnings

312

Dividends

REVENUE

410

Sales

610

Interest Revenue

EXPENSES

510

Cost of Goods Sold

515

Credit Card Expense

516

Cash Short and Over

520

Salaries Expense

531

Advertising Expense

532

Delivery Expense

533

Insurance Expense

534

Office Supplies Expense

535

Rent Expense

536

Repairs Expense

537

Selling Expenses

538

Store Supplies Expense

561

Depreciation Expense-Office Equipment

562

Depreciation Expense-Store Equipment

590

Miscellaneous Expense

710

Interest Expense
Labels and Amount Descriptions

Labels

For the Month Ended October 31, 20Y9

October 31, 20Y9

Amount Descriptions

Adjusted balance

Bank error in charging check as $640 instead of $460

Bank service charges

Check returned because of insufficient funds

Deposit in transit on October 31

Error in recording check

Note collected by bank, including $300 interest

Outstanding checks

Total additions

Total deductions

Bank Reconciliation
1. Prepare a bank reconciliation as of October 31, 20Y9.
Bank Reconciliation Instructions

Coastal Bike Co.

Bank Reconciliation

1

Cash balance according to bank statement

2

3

4

5

6

7

8

Cash balance according to company’s records

9

10

11

12

13

14

General Journal
2. Journalize the necessary entries.
General Journal Instructions
PAGE 1
JOURNAL
ACCOUNTING EQUATION

DATE

DESCRIPTION

POST. REF.

DEBIT

CREDIT

ASSETS

LIABILITIES

EQUITY

1

2

3

4

5

6

7

Final Question
3. If a balance sheet were prepared for Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash?

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