Question

Del Gato Clinic deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on June 30, 2017, its Cash account shows an $14,211 debit balance. Del Gato Clinic’s June 30 bank statement shows $13,671 on deposit in the bank. Outstanding checks as of June 30 total $2,105. The June 30 bank statement lists a $15 service charge. Check No. 919, listed with the canceled checks, was correctly drawn for $689 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 $698. The June 30 cash receipts of $2,639 were placed in the bank’s night depository after banking hours and were not recorded on the June 30 bank statement.

Required:
Prepare the adjusting journal entries that Del Gato Clinic must record as a result of preparing the bank reconciliation.

Answer 1

1. Bank Reconciliation - Book Balance

Book Balance $14,211

Add: Error in Check No. 919 $9

Less: Bank Service Charge $15

Adjusted Book Balance $14,205

2. Bank Reconciliation - Bank

Bank Balance $13,671

Add: Deposit of June 30 $2,639

Less: Outstanding Checks $2,105

Adjusted Bank Balance $14,205

3. Journal Entries required.

DR Miscellaneous Expenses $15

CR Cash $15

(To record bank service charge)

DR Cash $9

CR Utilities Expense $9

(To correct error in check)