Problem 7

BANK
RECONCILIATION
Requirement:

a. Prepare a bank
reconciliation on August
31 using the adjusted
balance method

b. Prepare adjusting
entries to correct the
cash in bank account on
August 31
Bank Book Book
Bank

Book

Bank

Bank Error 50,000

Bank

Book
Book
 Book
Bank

Book
+
Bank -
Bank Error 50,000
Bank
+

Book -
Book
-
Requirement a: bank reconciliation (Adjusted balance method)
Requirement b: adjusting entries
Requirement b: adjusting entries

70,000 - 50,000 = 20,000

20,000 is added in the cash
account because it was it was
recorded (by the depositor) in
the cash disbursement journal
(OS OF CASH DISBURSEMENT)
Requirement b: adjusting entries

Stop payment
"cancellation of payment
before it is processed"
Requirement b: adjusting entries
Requirement b: adjusting entries

misappropriated
cash
"misuse of
cash/inventory/other
assets"
Thank you!