Preparing a Bank Reconciliation and Journal Entries, and Reporting Cash
The bookkeeper at Tony Company has asked you to prepare a bank reconciliation as of February 28, 2006. The February 28, 2006, bank statement and the February T-account for cash showed the following(summarized):
Bank Statement
Checks Deposits Other Balance
Balance, February 1, 2006 $52,600
Deposits during February $30,650 83,250
Interestearned $150 83,400
Checks cleared during February $49,200 34,200
NSF checks-S. H. Schaffer 320 33,880
Bank service charges 40 33,840
Balance, February 28, 2006 33,840
+ Cash (A) -
Feb. 1 Balance 49,400 Feb. Checks written 50,400
Feb. Deposits 38,450
Tony Company's bank reconciliation at the end of January2006 showed outstanding checks of $3,200. No deposits were in transit at the end of January, but a deposit was in transit at theend of February.
Required:
1. Prepare a bank reconciliation for February.
2. Prepare any journal entries required as a result of the bank reconciliation. Why are they
necessary?
3. After the reconciliation journal entries are posted, what balance will be reflected in theCash account in the ledger?
4. If the company also has $50 on hand, whichis recorded in a different account called Cash on Hand,what total amount of cash should be reported on the balance sheetat the end of February?