The cash account for Ace Co. on August 31, 2004, indicated a balance of $9,420. The bank statement indicated a balance of $12,785 on August 31, 2004. The following reconciling items were discovered.
a) Checks outstanding totaled $6,240.
b) A deposit of $5,375, representing cash receipts of August 31, had been made too late to appear on the bank statement.
c) A check for $240 had been incorrectly charged by the bank as $420.
d) A check for $658 returned with the statement had been recorded by Ace as $568. The check was for the payment of an obligation to Cahill Co. on account.
e) The bank had collected for Ace $2,800 on a note left for collection.
The face of the note was $2,000.
f) Bank service charges for August amounted to $30. Additional information for the company's records:
- Checks outstanding totaled $6,240.
- A deposit of $5,375, representing cash receipts of August 31, had been made too late to appear on the bank statement.
- A check for $240 had been incorrectly charged by the bank as $420.
- A check for $658 returned with the statement had been recorded by Ace as $568. The check was for the payment of an obligation to Cahill Co. on account.
- The bank had collected for Ace $2,800 on a note left for collection. The face of the note was $2,000.
- Bank service charges for August amounted to $30.
Required:
Prepare the bank reconciliation and journalize the necessary entries.