question archive The cash account for Online Medical Co, at June 30, 2012, indicated a balance of $9,375

The cash account for Online Medical Co, at June 30, 2012, indicated a balance of $9,375

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The cash account for Online Medical Co, at June 30, 2012, indicated a balance of $9,375. The bank statement indicated a balance of $10,760 on June 30, 2012. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:
a. Checks outstanding totaled $3,900.
b. A deposit of $4,000, representing receipts of June 30, had been made too late to appear on the bank statement.
c. The bank had collected $2,100 on a note left for collection. The face of the note was $2,000.
d. A check for $550 returned with the statement had been incorrectly recorded by Online Medical Co. as $500. The check was for the payment of an obligation to Hirsch Co. for the purchase on account.
e. A check drawn for $60 had been erroneously charged by the bank as $600.
f. Bank service charges for June amounted to $25.
Instructions
1. Prepare a bank reconciliation
2. Journalize the necessary entries. The accounts have not been closed.
3. If a balance sheet
 were prepared for Online Medical Co. on June 30, 2012, what amount should be reported as cash?

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1.                                                                                 ONLINE MEDICAL CO.

Bank Reconciliation

June 30, 2012

 

      Cash balance according to bank statement..................................                                    $10,760

      Add:    Deposit of June 30, not recorded by bank                                     $4,000

                  Bank error in charging check as $600 instead

                        of $60.........................................................................                   540                4,540

                                                                                                                                               $15,300

      Deduct outstanding checks.........................................................                                         3,900

      Adjusted balance.........................................................................                                    $11,400

 

      Cash balance according to company’s records............................                                   $    9,375

      Add proceeds of note collected by bank, including

            $100 interest..........................................................................                                         2,100

                                                                                                                                               $11,475

      Deduct:     Error in recording check............................................             $      50

                        Bank service charges..................................................                     25                     75

      Adjusted balance.........................................................................                                    $11,400

 

2.   Cash.............................................................................................                2,100

            Notes Receivable...................................................................                                        2,000

            Interest Revenue....................................................................                                           100

 

      Accounts Payable x Hirsch Co. ..................................................                     50

      Miscellaneous Administrative Expense.......................................                     25

            Cash ......................................................................................                     75

 

3.    $11,400; the adjusted balance from the bank reconciliation should be reported as cash on the June 30, 2012, balance sheet for Online Medical Co.

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