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 v

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.

ATTACHMENT PREVIEW

Download attachment

Problem 5-4
Name:
Kim McAfee
Section:
Acct300
Score:
80%
Key Code:
2
Answers are entered in the cells with gray backgrounds.
Cells with non-gray backgrounds are protected and cannot be edited.
A red asterisk (*) wil appear in the column to the right of an incorrect answer.
1.
AZTEC INTERIORS
Bank Reconciliation
May 31, 2012
Cash balance according to bank statement
$10,956.74
Add:
Deposit of May 31, not recorded by bank
1,043.26
$12,000.00
Deduct outstanding checks:
No. 613
$137.50
No. 632
62.40
No. 634
503.30
703.20
Adjusted balance
$11,296.80
Cash balance according to company’s records*
$7,121.80
Add:
Proceeds of note col ected by bank, including interest
$4,160.00
Company error in recording deposit as 331.45 instead of 731.45
400.00
Company error in charging check as $328.87 instead of $238.87
90.00
4,650.00
$11,771.80
Deduct: Check returned because of insufficient funds
$450.00
Bank service charges
25.00
475.00
Adjusted balance
11,296.80
* Cash balance, May 1
$9,578.00
Plus cash deposited in May
5,948.81
Less checks written in May
(8,405.01)
Balance per company’s records, May 31
$7,121.80
2.
Balance Sheet
Assets
=
Liabilities
+
Statement of
Notes/Accts.
Accounts
Retained
Income
Cash Flows
Cash
+
Receivable
=
Payable
+
Earnings
Statement
Effects of note col ection and correcting company error
O
4,650.00
4,650.00
(4,000.00)
Sales
Int. revenue
Effects of NSF check and bank service charge
F
(475)
(475)
(475)
Misc. exp.
3.
The amount of cash as it should appear on the balance sheet
4.
Instructions
Stockholders’
Equity

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