Preparing a Bank Reconciliation and Journal Entries, andReporting Cash The bookk
ID: 2502222 • Letter: P
Question
Preparing a Bank Reconciliation and Journal Entries, andReporting Cash
The bookkeeper at Tony Company has asked you to prepare a bankreconciliation as of February 28, 2006. The February 28, 2006, bankstatement and the February T-account for cash showed the following(summarized):
Bank Statement
Checks Deposits Other Balance
Balance, February 1, 2006 $52,600
Deposits during February $30,650 83,250
Interestearned $150 83,400
Checks cleared during February $49,200 34,200
NSF checks—S. H. Schaffer 320 33,880
Bank service charges 40 33,840
Balance, February 28, 2006 33,840
+ Cash (A) -
Feb. 1 Balance 49,400 Feb. Checks written 50,400
Feb. Deposits 38,450
Tony Company’s bank reconciliation at the end of January2006 showed outstanding checks of $3,200. No deposits were intransit at the end of January, but a deposit was in transit at theend of February.
Required:
1. Prepare a bank reconciliation forFebruary.
2. Prepare any journal entries required as aresult of the bank reconciliation. Why are they
necessary?
3. After the reconciliation journal entries areposted, what balance will be reflected in the Cash accountin the ledger?
4. If the company also has $50 on hand, whichis recorded in a different account called Cash on Hand,what total amount of cash should be reported on the balance sheetat the end of February?
Explanation / Answer
Preparing a Bank Reconciliation and Journal Entries, andReporting Cash The bookk