Question

Del Gato Clinic's cash account shows a $11,905 debit balance and its bank statement shows $10,732 on deposit at the close of business on June 30. Outstanding checks as of June 30 total $1,264. The June 30 bank statement lists a $70 bank service charge. Check No. 919, listed with the canceled checks, was correctly drawn for $589 in payment of a utility bill on June 15. Del Gato Clinic mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $598. The June 30 cash receipts of $2,376 were placed in the bank night depository after banking hours and were not recorded on the June 30 bank statement.

1. Prepare the adjusting journal entries that Del Gato Clinic must record as a result of preparing the bank reconciliation.
2. Prepare a bank reconciliation for Del Gato Clinic using the above information.

Answer 1

Del Gato Clinic

1. Adjusting Journal Entries:

Debit Bank service charge $70

Credit Cash $70

To record bank service charge for the month.

Debit Cash $9

Credit Utilities $9

To correct overstated check No. 919.

2. Bank Reconciliation Statement as of June 30

Balance as per adjusted cash account $11,844

Add Outstanding checks for the month 1,264

Less Uncredited deposits (2,376)

Balance as per bank statement $10,732

Step-by-step explanation:

a) Data and Calculations:

Cash account debit balance = $11,905

Bank statement balance = $10,732

Outstanding checks for the month = $1,264

Bank service charge = $70

Overstated check No. 919 = $9 ($598 - $589)

Uncredited deposits = $2,376

Cash Account Adjustments:

June 30 Balance = $11,905

Bank service charge = (70)

Overstated check No. 919 = 9

Adjusted cash account balance $11,844