Wednesday 17 October 2012

Stromberg Company of Zwingle, Kansas, spreads herbicides and applies liquid fertilizer for local farmers. On May 31, 2012, the company’s Cash account per its general ledger showed a balance of $6,825.90.

Stromberg Company of Zwingle, Kansas, spreads herbicides and applies liquid fertilizer for local farmers. On May 31, 2012, the company’s Cash account per its general ledger showed a balance of $6,825.90.

The bank statement from Zwingle State Bank on that date showed the following balance.

ZWINGLE STATE BANK

Checks and Debits


Deposits and Credits


Daily Balance

XXX


XXX


5-31 7,055.00


A comparison of the details on the bank statement with the details in the Cash account revealed the following facts.

1.


The statement included a debit memo of $65.00 for the printing of additional company checks.

2.


Cash sales of $908.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $958.15. The bank credited Stromberg Company for the correct amount.

3.


Outstanding checks at May 31 totaled $285.25, and deposits in transit were $1,905.15.

4.


On May 18, the company issued check No. 1181 for $684 to M. Dornbos, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Stromberg Company for $648.

5.


A $2,687.00 note receivable was collected by the bank for Stromberg Company on May 31 plus $135.00 interest. The bank charged a collection fee of $20.00. No interest has been accrued on the note.

6.


Included with the cancelled checks was a check issued by Strongberg Company to P. Jordan for $335.00 that was incorrectly charged to Stromberg Company by the bank.

7.


On May 31, the bank statement showed an NSF charge of $467.00 for a check issued by Bev Fountain, a customer, to Stromberg Company on account.


(a) Prepare the bank reconciliation at May 31, 2012.

(b) Prepare the necessary adjusting entries for Stromberg Company at May 31, 2012. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 



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