Rancho Foods deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of May 31 have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account.

CASH ACCOUNT:

Balance as of May 1 ....................$9,578.00

CASH RECEIPTS FOR MONTH OF MAY .........$5,255.89

DUPLICATE DEPOSIT TICKETS:

Date and amount of each deposit in May:

CHECKS WRITTEN:
Number and amount of each check issued in May:

MEMBER FDIC PAGE 1
AMERICAN NATIONAL BANK
OF DETROIT

Instructions
1. Prepare a bank reconciliation as of May 31. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales except for the note receivable of $4,000 and interest of $160 collected on May 14. All checks are written to satisfy accounts payable.
2. Illustrate the effects on the accounts and financial statements of the bank reconciliation.
3. What is the amount of Cash that should appear on the balance sheet as of May 31?
4. Assume that a canceled check for $50 has been incorrectly recorded by the bank as $500.
Briefly explain how the error would be included in a bank reconciliation and how it should becorrected.

Transcribed Image Text:

Date Amount Date Amount Date Amount $569.50 701.80 189.24 May 12 16 $580.70 600.10 701.26 May 23 26 31 731.45 601.50 580.34 May 2 19 Check No. 614 615 616 617 618 619 620 Amount S243.50 350.10 279.90 395.50 435.40 320.10 238.87 Check No. Amount Check No. Amount 621 622 623 624 625 626 627 309.50 Void Void 707.01 185.63 550.03 318.73 628 629 630 631 632 633 634 S 837.70 329.90 882.80 1,081.56 62.40 310.08 503.30 Total amounchecks issued in $8,342.01 AB ACCOUNT NUMBER FROM S/01/20YS TO 5/31/2OY8 BALANCE DETROIT, MI 48201-2500 (313)933-8547 9,422.80 8,086.88 7,462.11 9 DEPOSITS 20 WITHDRAWALS Rancho Foods OTHER DEBITS AND CREDITS 8,650.0OCR NEW BALANCE 11,697.04 780.80 ве9.so 701.80 818.84 580.70 MS 4,000.00 NS 180.00 800.10 08/01 08/03 05/06 No.580 10.10 No.81 No.608 83.B0 No.814 243.50 No.618 380.10 No.816 2γ9.90 No.817 B3.B0 No.818 438.40 No.619 B80.10 No.8召0 2 8.87 H0.6 1 308.30 No.824 707.01 No.B28 158.6 No.826 B50.03 98.50 B,801.00 10,041.8o 10,113.30 10,101.84 10,188.37 13,108.88 12,888.20 18,308.87 10,098.31 10,4 4.09 11,158.84 11,757.04 11,897.04 05/13 05/14 05/14 No630 888.80 No.831 1,08. NS 480.00 N0.638 8.40 O.833 310.08 701.28 71.4B 801.50 08/21 05/84 05/88 08/31 80 80.00 RC-KRROR CORRECTION MB MISCHLLANEOUS OD-OVERDRAFT PS PAYMENT STOPPRD 80SERVICE CHARGH ANY BRROR OR EXCHPTION SHOULD BE REPORTED IMMUDIATEIY BANK RECONCILIATION FOR PRECEDING MONTH (DATED APRIL 30): Cash balance according to bank statement Add deposit of April 30, not recorded by bank S9,422.80 780.80 $10,203.60 Deduct outstanding checks: No. 580 No. 602 No. 612 No. 613 Adjusted balance 5310.10 85.50 92.50 137.50 625.60 9,578.00 9,605.70 27.70 9,578.00 Cash balance according to company's records Deduct service charges Adjusted balance