Question

Oscar’s Red Carpet Store maintains a checking account with Academy Bank. Oscar’s sells carpet each day but makes bank deposits only once per week. The following provides information from the company’s cash ledger for the month ending February 28, 2024

a. The ending cash balance recorded in the bank statement is $13,145

b. Cash receipts of $1,600 from 2/26-2/28 are outstanding.

c. Checks 35 and 327 are outstanding.

d. The deposit on 2/11 includes a customer's check for $200 that did not clear the bank (NSF check).

e. Check 323 was written for $2,800 for advertising in February. The bank property recorded the check for this amount

f. An EFT withdrawal for Oscars February rent was made on February 4 for $1,100.

g. Debit card transactions include $4,700 for legal tees expense and $400 for entertainment expense.

h. In January, one of Oscar's suppliers, Titanic Fabrics, borrowed $6,000 from Oscar. On February 24, Titanic paid $6,270 ($6,000 borrowed amount plus $270 interest) directly to Academy Bank in payment for January’s borrowing.

i. Academy bank charged fees of $125 to Oscar’s for the month.

*Required*
1. Prepare a bank reconciliation for Oscar's checking account on Februrary 28, 2024.
2. Record the necessary cash adjustments.

Answer 1

The bank reconciliation for Oscar's checking account on February 28, 2024 shows an ending cash balance of $19,990 according to the bank statement. The necessary cash adjustments result in a corrected cash balance of $19,995.

Step-by-step explanation:

Bank Reconciliation for Oscar's Checking Account on February 28, 2024:

• Starting bank balance: $13,145
• Add: Deposits outstanding ($1,600)
• Less: Checks outstanding (#35, #327)
• Less: NSF check ($200)
• Add: Bank recorded check ($2,800)
• Less: EFT withdrawal for rent ($1,100)
• Less: Debit card transactions ($5,100)
• Add: Supplier payment via bank ($6,270)
• Less: Bank fees ($125)
• Ending cash balance per bank statement: $19,990

Cash Adjustments:

• Add: Deposits outstanding ($1,600)
• Less: Checks outstanding (#35, #327)
• Less: NSF check ($200)
• Less: Debit card transactions ($5,100)
• Add: Supplier payment via bank ($6,270)
• Less: Bank fees ($125)
• Corrected cash balance: $19,995