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On May 31, 2010, James Logan Company had a cash balance per books of $6,781.50. The bank statement from Farmers State Bank on that date showed a balance of $6,404.60. The comparison of the statement with the cash account revealed the given facts.

1) The statement comprised a debit memo of $40 for the printing of additional company checks.

2) Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were wrongly made for $886.15. The bank credited Logan Company for the right amount.

3) Outstanding checks at May 31 totaled $576.25. Deposits in transit were $1,916.15.

4) On May 18, the company issued check No. 1181 for $685 to Barry Trest, on account. The check, which cleared the bank in May, was wrongly journalized and posted by Logan Company for $658.

5) A $2,500 note receivable was collected by the bank for Logan Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.

6) Comprised with the cancelled checks was a check issued by Bridgetown Company to Tom Lujak for $800 which was wrongly charged to Logan Company by the bank.

7) On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sandy Grifton, a customer, to Logan Company on account.

Requirements:

1) Make a bank reconciliation.

2) Prepare adjusting entries.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M920183

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