The bank reconciliation completed in Question 3 of the Connect Part was for Cabot Corporation’s cash account on December 31, year 2.
a. Include the “Book balance” given in question 3 as the “unadjusted balance” for the end of year 2 on Attachment 1 for the “cash and cash equivalents” account.
b. Prepare the adjusting journal entries (there should be 2) as required from the bank reconciliation completed in question 3 of the Connect Part. Make sure you include your journal entries in Attachment 2.
c. Post the journal entries from Attachment 2 to the T accounts in Attachment 1.
d. Determine the adjusted (ending) balance in “cash and cash equivalents” on Attachment 1.

Connect Part

Cabot Corporation's cash account shows a $30,700 debit balance and its bank statement shows $29,000 on deposit at the close of business on December 31 of year 2.

1. The December 31 bank statement lists $260 in bank service charges; the company has not yet recorded the cost of these services.
2. Outstanding checks as of December 31 total $7,200.
3. December 31 cash receipts of $7,800 were placed in the bank’s night depository after banking hours and were not recorded on the December 31 bank statement.
4. In reviewing the bank statement, a $560 check written by Smith Company was mistakenly drawn against Cabot's account.
5. The bank statement shows a $280 NSF check from a customer; the company has not yet recorded this NSF check.

Prepare its bank reconciliation using the above information.

Answer rating: 100% (QA)

CABOT CORPORATION Bank Reconciliation Bank Statement Balance 29000 B... View the full answer