WileyPlus Question

Exercise 7-11 (Part Level Submission)

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

Balance, August 1 $18,600 Bank debit memorandum:
August deposits 71,200 Safety deposit box fee $ 50
Checks cleared in August 68,653 Service charge 75
Bank credit memorandum: Balance, August 31 21,092
Interest earned 70

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)

Correct answer. Your answer is correct.

Determine deposits in transit.

Deposits in transit $Entry field with correct answer7825

*(b)

Correct answer. Your answer is correct.

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

Outstanding checks $Entry field with correct answer9777

*(c)

Correct answer. 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
Entry field with correct answerAugust 31, 2017

Entry field with correct answerCash balance per bank statement

$Entry field with correct answer21092

Entry field with correct answerAdd

:

Entry field with correct answerDeposits in transit

Entry field with correct answer7825

Entry field with correct answer28917

Entry field with correct answerLess

:

Entry field with correct answerOutstanding checks

Entry field with correct answer9,777

Entry field with correct answerAdjusted cash balance per bank

$Entry field with correct answer19140

Entry field with correct answerCash balance per books

$Entry field with correct answer19,555

Entry field with correct answerAdd

:

Entry field with correct answerInterest earned

Entry field with correct answer70

Entry field with correct answer19625

Entry field with correct answerLess

:

Entry field with correct answerService charge

$Entry field with correct answer75

Entry field with correct answerError in recording check

Entry field with correct answer360

Entry field with correct answerSafety deposit box rent

Entry field with correct answer50

Entry field with correct answer485

Entry field with correct answerAdjusted cash balance per books

$Entry field with correct answer19140

*(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.)

Date

Account Titles and Explanation

Debit

Credit

Aug. 31

(To record Interest earned)

Aug. 31

(To correct error in recording check)

Aug. 31

(To record service charge and safety deposit box fee)

 
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