WileyPlus Question

Metlock, Inc.’s bank statement from Main Street Bank at August 31, 2017, gives the following information.

A summary of the Cash account in the ledger for August shows the following: balance, August 1, $18,900; receipts $74,200; disbursements $73,545; and balance, August 31, $19,555. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $4,825 and outstanding checks of $4,525. In addition, you determine that there was an error involving a company check drawn in August: A check for $400 to a creditor on account that cleared the bank in August was journalized and posted for $40.

*(a)

	Your answer is correct.

Determine deposits in transit.

Deposits in transit

$7825

*(b)

	Your answer is correct.

Determine outstanding checks. (Hint: You need to correct disbursements for the check error.)

Outstanding checks

$9777

*(c)

	Your answer is correct.

Prepare a bank reconciliation at August 31. (List items that increase balance as per bank & books first.)

METLOCK, INC. Bank Reconciliation August 31, 2017
Cash balance per bank statement					$21092
Add :	Deposits in transit				7825
					28917
Less :	Outstanding checks				9,777
Adjusted cash balance per bank					$19140
Cash balance per books					$19,555
Add :	Interest earned				70
					19625
Less :
	Service charge		$75
	Error in recording check		360
	Safety deposit box rent		50
					485
Adjusted cash balance per books					$19140

*(d)

Journalize the adjusting entries to be made by Metlock, Inc. at August 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)