Math  /  Data & Statistics

QuestionThe following data were gathered to use in reconciling the bank account of Dotson Company: \begin{tabular}{lr} Balance per bank & $17,980\$ 17,980 \\ Balance per company records & 15,005 \\ Bank service charges & 85 \\ Deposit in transit & 2,650 \\ NSF check & 980 \\ Outstanding checks & 6,690 \end{tabular} a. What is the adjusted balance on the bank reconciliation? $13,940\$ 13,940 \checkmark
Feedback: * Check My Work a. Set up two columns: one for the company cash account section and the other for the bank balance section. Determine the effect of the data on each column. Recall that when you are finished, the adjusted balances in the bank and company sections of the reconciliation must be equal. If not, an item has been overlooked or treated in error. b. Journalize any necessary entries for Dotson Company based on the bank reconciliation. If an amount box does not require an entry, leave it blank.

Studdy Solution

STEP 1

1. The bank reconciliation involves adjusting both the bank balance and the company’s cash account balance.
2. Adjustments are made for items such as deposits in transit, outstanding checks, bank service charges, and NSF checks.
3. The goal is to ensure that the adjusted bank balance equals the adjusted company cash account balance.

STEP 2

1. Adjust the bank balance.
2. Adjust the company cash account balance.
3. Ensure adjusted balances are equal.
4. Journalize necessary entries for Dotson Company.

STEP 3

Start with the balance per bank:
$17,980 \$17,980

STEP 4

Add deposits in transit to the bank balance:
$17,980+$2,650=$20,630 \$17,980 + \$2,650 = \$20,630

STEP 5

Subtract outstanding checks from the bank balance:
$20,630$6,690=$13,940 \$20,630 - \$6,690 = \$13,940

STEP 6

Start with the balance per company records:
$15,005 \$15,005

STEP 7

Subtract bank service charges from the company cash account balance:
$15,005$85=$14,920 \$15,005 - \$85 = \$14,920

STEP 8

Subtract NSF check from the company cash account balance:
$14,920$980=$13,940 \$14,920 - \$980 = \$13,940

STEP 9

Verify that the adjusted bank balance equals the adjusted company cash account balance:
Adjusted Bank Balance=$13,940 \text{Adjusted Bank Balance} = \$13,940 Adjusted Company Cash Account Balance=$13,940 \text{Adjusted Company Cash Account Balance} = \$13,940

STEP 10

Journalize necessary entries for Dotson Company:
- Bank Service Charges: $ \begin{align*} \text{Debit: Bank Service Charges Expense} & \quad \$85 \\ \text{Credit: Cash} & \quad \$85 \\ \end{align*} \]
- NSF Check: $ \begin{align*} \text{Debit: Accounts Receivable} & \quad \$980 \\ \text{Credit: Cash} & \quad \$980 \\ \end{align*} \]
The adjusted balance on the bank reconciliation is:
$13,940 \boxed{\$13,940}

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