MK2102 - BASIC ACCOUNTING FOR ENTREPENEUR

WEEK.3. FRAUD, IC AND CASH EXERCISES_SS-2020

REVIEW AND EXERCISE
JUNE, 10 2020

No. 1 - Aquilar Co.

The Cash Account of Aquilar Co. showed a ledger balance of $3,969.85 on June 30, 2019 The
bank statement as of that date showed a balance of $4,150.
Upon comparing the statement with the cash records, the following facts were determined.
(1) There were bank service charges for June of $25.
(2) A bank memo stated that Bao Dai’s note for $1,200 and interest of $36 had been
collected on June 29, and the bank had made a charge of $5.50 on the collection. (No
entry had been made on Aguilar’s books when Bao Dai’s not was sent to the bank for
collection).
(3) Receipt for June 30, for $3,390 were not deposited until July 2.
(4) Checks outstanding on June 30, totaled $2,136.05.
(5) The bank had charged the Aquilar Co.’s account for a customer’s uncollectable check
(NSF) amounting to $253.20 on June 29.
(6) A customer’s checks for $90 had been entered as $60 in the cash receipt journal by
Aquilar on June 15.
(7) Check no. 742 in the amount of $491 had been entered in the cash journal as $419, and
check no. 747 in the amount of $58.20 had been entered as $582. Both checks had been
issued to pay for purchases of equipment.

Instructions:
Prepare a bank reconciliation dated June 30, 2019, proceeding to a correct cash balance.
Prepare any entries journal necessary to make the books correct an complete.

No. 2 - Terrell Ltd.

On May 31, 2020, Terrell Ltd. had a cash balance per books of £6,781.50. The bank statement
from Home Town Bank on that date showed a balance of £6,824.60. A comparison of the
statement with the Cash account revealed the following facts.
1. The statement included a debit memo of £60 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 Terrell
Company for the correct amount.
3. Outstanding checks at May 31 totaled £276.25. Deposits in transit were £1,916.15.
4. On May 18, the company issued check No. 1181 for £685 to Barry Dietz on account. The
check, which cleared the bank in May, was incorrectly journalized and posted by Terrell
for £658.
5. A £3,000 note receivable was collected by the bank for Terrell on May 31 plus £80
interest. The bank charged a collection fee of £20. No interest has been accrued on the
note.

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 6. Included with the cancelled checks was a check issued by Bridges plc to Jon Newton for
£600 that was incorrectly charged to Terrell by the bank.
7. On May 31, the bank statement showed an NSF charge of £640 for a check issued by
Sandy Grifton, a customer, to Terrell on account.

Instructions
(a) Prepare the bank reconciliation at May 31, 2020.
(b) Prepare the necessary adjusting entries for Terrell at May 31, 2020

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