Financial Reconciliation
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On May 31, 2008 MF Summit Company had a cash balance per books of $6, 781.50. The bank statement from Little Bank on that date showed a balance of $6404.60. A comparison of the statement with the cash account revealed the following facts.
1. The statement included 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 incorrectly made for $886.15. The bank credited Summit Company for the correct amount.
3. Outstanding checks at May 31, totalled $576.25. Deposits in transit were $1916.15.
4. On May 18, the company issued check no. 1181 for $685.00 to Barry Trest, on account. The check which cleared in May, was incorrectly journalized and posted by Summit Company for $658.00
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. Included with the cancelled checks was a check issued by Bridgetown Company to Tom Lujak for $800.00 that was incorrectly charged to Summit Company by the bank.
7. On May 31, the bank statement showed an NSF charge of $680.00 for a check issued by Sandy Grifton, a customer, to Summit Company on account.
A. Prepare the bank reconciliation at May 31, 2008
B. Prepare the necessary adjusting entries for Summit Company at May 31, 2008
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Solution Summary
This solution prepares a bank reconciliation and the necessary adjusting entries for Summit Company.
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