On August 10, Marden Co. received its statement from Last National Bank for its checking account. The statement showed all transactions recorded by the bank for the period of July 1 through July 31. The general ledger account can now be reconciled to the bank’s records of the checking account. The accountant confirms that all transactions have been posted from the journal to the ledger. (This tells us that the Cash account balance reflects all transactions involving cash.) Comparing the bank statement to the Cash account in the general ledger reveals several items to be reconciled. Review each item below and determine which balance will need to be adjusted by the item and whether it is to be added or deducted from that balance
| Reconciling item | Balance to be adjusted | Effect on balance | |
| 1. | A deposit in the amount of $1510.0 made on July 31 was not reported on the bank statement. | _________________ | _________________ |
| 2. | The accountant notices that a deposit made on July 6 has been reported on the bank statement as $230.0. The ledger account and the deposit receipt from the bank both show that the deposit was actually $500.0. | _________________ | _________________ |
| 3. | Check number 1281 was written on July 26 in the amount of $450.0 and is not listed on the bank statement. | _________________ | _________________ |
| 4. | Check number 1282 was written on July 28 in the amount of $680.0 and is not listed on the bank statement. | _________________ | _________________ |
| 5. | Check number 1286 was written on July 8 in the amount of $450.0 and is not listed on the bank statement. | _________________ | _________________ |
| 6. | Check number 1284 was written on July 31 in the amount of $1005.0 and is not listed on the bank statement. | _________________ | _________________ |
| 7. | One of Marden’s customers deposited $740.0 directly to Marden’s bank account for payment of its amount due. This appeared on the bank statement as a credit memo. | _________________ | _________________ |
| 8. | An additional credit memo in the amount of $45.0 reflected the amount of interest that the customer owed. | _________________ | _________________ |
| 9. | Marden Co. has its payment for phone service taken directly from its checking account. $250.0 appeared as a debit memo for July’s payment. | _________________ | _________________ |
| 10. | Marden Co. had received and deposited a check from one of its customers as payment on account. The check was returned for nonsufficient funds. The amount of the check was $515.0. | _________________ | _________________ |
| 11. | Check number 1282 was written for $680.0 to a supplier in payment on the amount due. The check cleared the bank for the written amount, $680.0. However, the check was recorded in the journal and posted to Marden Co.’s ledger in the amount of $655.0. (The journal entry was a debit to Accounts Payable and a credit to Cash for $655.0.) | _________________ | _________________ |
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Based on the 11 items above, prepare the bank reconciliation. The beginning balance per the bank and general ledger cash account are provided. Enter all amounts as positive numbers.
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APPLY THE CONCEPTS: Prepare the adjusting entries and determine their effect
Prepare the journal entries required to update the accounting records after reconciling the checking account. The date that the entry is prepared is August 10, but, for your convenience, in this problem the date column has been replaced with the reconciling item number. (Hint: Click on each item number below for more information about the item.)
If an amount box does not require an entry, leave it blank.
| GENERAL JOURNAL | ||||||
| ITEM | DESCRIPTION | DEBIT | CREDIT | |||
| 1 | 7 | _________________ | _________________ | _________________ | 1 | |
| 2 | _________________ | _________________ | _________________ | 2 | ||
| 3 | 3 | |||||
| 4 | 8 | _________________ | _________________ | _________________ | 4 | |
| 5 | _________________ | _________________ | _________________ | 5 | ||
| 6 | 6 | |||||
| 7 | 9 | _________________ | _________________ | _________________ | 7 | |
| 8 | _________________ | _________________ | _________________ | 8 | ||
| 9 | 9 | |||||
| 10 | 10 | _________________ | _________________ | _________________ | 10 | |
| 11 | _________________ | _________________ | _________________ | 11 | ||
| 12 | 12 | |||||
| 13 | 11 | _________________ | _________________ | _________________ | 13 | |
| 14 | _________________ | _________________ | _________________ | 14 | ||
| Click on each number below for information about the adjustments. ITEM |
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+ 7
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+ 8
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+ 9
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+ 10
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+ 11
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Indicate the effect on the accounting equation of each transaction in the journal entries above.
| Row | Assets | = | Liabilities | + | Equity | Appears on: |
| 1 | _________________ | _________________ | _________________ | _________________ | ||
| 2 | _________________ | _________________ | _________________ | _________________ | ||
| 4 | _________________ | _________________ | _________________ | _________________ | ||
| 5 | _________________ | _________________ | _________________ | _________________ | ||
| 7 | _________________ | _________________ | _________________ | _________________ | ||
| 8 | _________________ | _________________ | _________________ | _________________ | ||
| 10 | _________________ | _________________ | _________________ | _________________ | ||
| 11 | _________________ | _________________ | _________________ | _________________ | ||
| 13 | _________________ | _________________ | _________________ | _________________ | ||
| 14 | _________________ | _________________ | _________________ | _________________ |
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