The cash account for Stone Systems at July 31, 20Y5, indicated a balance of $12,350. The bank statement indicated a balance of $15,930 on July 31, 20Y5. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:
Checks outstanding totaled $17,865.

A deposit of $9,150, representing receipts of July 31, had been made too late to appear on the bank statement.

The bank had collected $6,095 on a note left for collection. The face of the note was $5,750.

A check for $390 returned with the statement had been incorrectly recorded by Stone Systems as $930. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account.

A check drawn for $1,810 had been incorrectly charged by the bank as $1,180.

Bank service charges for July amounted to $80.

Required:

1. Prepare a bank reconciliation.

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash.

3. If a balance sheet were prepared for Stone Systems on July 31, 20Y5, what amount should be reported as cash?

1.

Balance at bank as per cash book                            $12,810

Add Unpresented Checks                                          $17,865

Less Lodgements not yet credited                           ( $9,150)

Balance as per Bank Statement                                 $21,525

The bank has to make corrections of the error it has made - a note should be sent

2.

J1

Cash  $540 (debit)

Holland Co $540 (credit)

J2

Bank Charges $80 (debit)

Cash $80 (credit)

3. Cash Balance = $12,810

Explanation:

Step 1 First Bring the Cash Balance in the Cash Book Up to Date by doing the following :

Debit :

Balance as per Cash Book as at July 31, 20Y5       $12,350

Over stated Check - Holland Co 930-390                   $540

Totals                                                                         $ 12,890

Credit:

Bank service charges                                                     $80

Updated Cash Book - Cash Balance                        $12,810

Totals                                                                         $ 12,890

Step 2 Prepare the Bank Reconciliation Statement as follows

Balance at bank as per cash book                            $12,810

Add Unpresented Checks                                          $17,865

Less Lodgements not yet credited                           ( $9,150)

Balance as per Bank Statement                                 $21,525

The bank has to make corrections of the error it has made - a note should be sent

J1

Cash  $540 (debit)

Holland Co $540 (credit)

J2

Bank Charges $80 (debit)

Cash $80 (credit)

if you use only 25 for your entertainment and only 200 for the groceries that you really need and take out the 50 per month for the computer then that should be enough