Reference no: EM13256881

Preparing a Bank Reconciliation and Journal Entries, and Reporting Cash

The bookkeeper at Tony Company has asked you to prepare a bank reconciliation as of February 28, 2006. The February 28, 2006, bank statement and the February T-account for cash showed the following(summarized):

Bank Statement

     Checks                             Deposits         Other                                 Balance

Balance, February 1, 2006                                                                             $52,600

Deposits during February                                $30,650                                 83,250

Interestearned                                                   $150                                     83,400

Checks cleared during February   $49,200                                                      34,200

NSF checks-S. H. Schaffer                                                  320                33,880

Bank service charges                                                                40                  33,840

Balance, February 28, 2006                                                                           33,840

+ Cash (A) -

Feb. 1            Balance           49,400                       Feb. Checks written     50,400

Feb.               Deposits          38,450

Tony Company's bank reconciliation at the end of January2006 showed outstanding checks of $3,200. No deposits were in transit at the end of January, but a deposit was in transit at theend of February.

Required:

1. Prepare a bank reconciliation for February.

2. Prepare any journal entries required as a result of the bank reconciliation. Why are they

necessary?

3. After the reconciliation journal entries are posted, what balance will be reflected in theCash account in the ledger?

4. If the company also has $50 on hand, whichis recorded in a different account called Cash on Hand,what total amount of cash should be reported on the balance sheetat the end of February?