Comprehensive Reconciliation - In auditing the Train Company

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Comprehensive Reconciliation - In auditing the Train Company, you obtain directly from the bank Train’s bank statement, canceled checks, and other memoranda which relate to the company’s bank account for December 2007. In reconciling the bank balance on December 31, 2007 with that shown on the company’s books, you observe the following facts:

1. Balance per bank statement

$91,174.63

2. Balance per books

59,088.46

3. Outstanding checks, 12/31/07

33,378.82

4. Receipts of 12/31/07 deposited on 1/1/08

5,317.20

5. Service charge for December

6. Proceeds of bank loan, 12/15/07 omitted from company records (discounted for 3 months at 12% per year)

11,640.00

7. Deposit of 12/20/07 omitted from the bank statement

2,892.41

8. Check of Rome Products Co. charged back on 12/22/07 for lack of countersignature. Redeposited 1/5/08. No entry was made for the chargeback or the redeposit.

873.74

9. Error on bank statement in entering deposit of 12/18/07:

Correct amount

$3,182.40

Entered in statement

3,181.40

1

10. Check No. 3917 of Trait Manufacturing Co. charged in error to company’s account

2,690.00

11. Proceeds of note of J. Somers & Co. collected by bank 12/11/07 not entered on books:

$2,000.00

 

Principal

40.00

Interest

$2,040.00

Less: collection charge

5.00

2,035.00

12. Erroneous debit memo of 12/22/07 to charge company’s account with settlement of bank loan, which was paid by check No. 8714 on same date

 

5,000.00

13. Error on bank statement in entering deposit of 12/4/07

Entered as

$4,817.10

 

Correct amount

4,807.10

10.00

14. Deposit of Trait Manufacturing Co. of 12/8/07 credited in error to the company

 

1,819.20

Required

1. Prepare a reconciliation of the Train Company’s bank account.

2. Prepare journal entries to adjust the Train Company’s books to reflect the correct bank balance on December 31, 2007.

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