The bank portion of the bank reconciliation for Backhaus Company at November 30,

QUESTION

P8-4A, P.374/375 Book. Financial Accounting Ed.6The bank portion of the bank reconciliation for Backhaus Company at November 30,2008, was as follows.374 Chapter 8 Internal Control and CashBACKHAUS COMPANYBank ReconciliationNovember 30, 2008Cash balance per bank $14,367.90Add: Deposits in transit 2,530.2016,898.10Less: Outstanding checksCheck Number Check Amount3451 $2,260.403470 720.103471 844.503472 1,426.803474 1,050.00 6,301.80Adjusted cash balance per bank $10,596.30Journalize and post petty cash fund transactions.(a) July 15, Cash short $1.80(b) Aug. 31 balance $300The adjusted cash balance per bank agreed with the cash balance per books at November 30.The December bank statement showed the following checks and deposits.Bank StatementChecks – DepositsDate Number Amount – Date Amount12-1 3451 $ 2,260.40 12-1 $ 2,530.2012-2 3471 844.50 12-4 1,211.6012-7 3472 1,426.80 12-8 2,365.1012-4 3475 1,640.70 12-16 2,672.7012-8 3476 1,300.00 12-21 2,945.0012-10 3477 2,130.00 12-26 2,567.3012-15 3479 3,080.00 12-29 2,836.0012-27 3480 600.00 12-30 1,025.0012-30 3482 475.50 Total $18,152.9012-29 3483 1,140.0012-31 3485 540.80Total $15,438.70Cash Payments JournalDate Number Amount Date Number Amount12-1 3475 $1,640.70 12-20 3482 $ 475.5012-2 3476 1,300.00 12-22 3483 1,140.0012-2 3477 2,130.00 12-23 3484 798.0012-4 3478 621.30 12-24 3485 450.8012-8 3479 3,080.00 12-30 3486 1,889.5012-10 3480 600.00 Total $14,933.2012-17 3481 807.40Cash ReceiptsJournalDate Amount12-3 $ 1,211.6012-7 2,365.1012-15 2,672.7012-20 2,954.0012-25 2,567.3012-28 2,836.0012-30 1,025.0012-31 1,690.40Total $17,322.10The cash records per books for December showed the following.The bank statement contained two memoranda:1. A credit of $4,145 for the collection of a $4,000 note for Backhaus Company plus interest of$160 and less a collection fee of $15. Backhaus Company has not accrued any interest on thenote.2. A debit of $572.80 for an NSF check written by D. Chagnon, a customer.At December 31, thecheck had not been redeposited in the bank.At December 31 the cash balance per books was $12,985.20, and the cash balance per the bankstatement was $20,654.30. The bank did not make any errors, but two errors were made byBackhaus Company.Instructions(a) Using the four steps in the reconciliation procedure, prepare a bank reconciliation atDecember 31.(b) Prepare the adjusting entries based on the reconciliation. (Hint:The correction of any errorspertaining to recording checks should be made to Accounts Payable. The correction of anyerrors relating to recording cash receipts should be made to Accounts Receivable.)

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