Reference no: EM13508515
Shellankamp Company of Canton, Iowa, spreads herbicides and applies liquid fertilizer for local farmers. On May 31, 2010, the company's cash account per its general ledger showed a balance of $6,738.90. The bank statement from Canton State Bank on that date showed the following balance.
|
CANTON STATE BANK
|
|
Checks and Debits
|
Deposits and Credits
|
Daily Balance
|
|
XXX
|
XXX
|
5-31 7,112.00
|
A comparison of the details on the bank statement with the details in the cash account revealed the following facts.
1. The statement included a debit memo of $40 for the printing of additional company checks.
2. Cash sales of $833.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $839.15. The bank credited Shellankamp Company for the correct amount.
3. Outstanding checks at May 31 totaled $276.25, and deposits in transit were $1,880.15.
4. On May 18, the company issued check No. 1181 for $685 to R. Delzer, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Shellankamp Company for $658.
5. A $2,700 note receivable was collected by the bank for Shellankamp Company on May 31 plus $110 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.
6. Included with the cancelled checks was a check issued by Shellman Company to P. Jonet for $360 that was incorrectly charged to Shellankamp Company by the bank.. On May 31, the bank statement showed an NSF charge of $380 for a check issued by Natalie Fong, a customer, to Shellankamp Company on account.
Instructions
(a) Prepare the bank reconciliation at May 31, 2010.
(b) Prepare the necessary adjusting entries for Shellankamp Company at May 31, 2010.