Rick Hall owns a card shop, Hall’s Cards. The following cash information is available for the month of August 2016.
As of August 31, the bank statement shows a balance of $11,720. The August 31 unadjusted balance in the Cash account of Hall’s Cards is $8,018. A review of the bank statement revealed the following information:
1. A deposit of $1,890 on August 31, 2016, does not appear on the August bank statement.
2.
It was discovered that a check to pay for baseball cards was correctly written and paid by the bank for $3,510 but was recorded on the books as $4,410.
3.
When checks written during the month were compared with those paid by the bank, three checks amounting to $4,785 were found to be outstanding.
4. A debit memo for $93 was included in the bank statement for the purchase of a new supply of checks.
Required
a. Prepare a bank reconciliation at the end of August showing the true cash balance.
b. Prepare any necessary journal entries to adjust the books to the true cash balance.
Thank you!
