You are an accountant for Wrigley Inc., (a company that makes baseball equipment). The CEO, Joe Madden, has asked you to prepare the December bank reconciliation for the company’s operating cash account (Account #100).
The CEO provided you with the December 2015 bank statement. After you review the bank statement, you have noted a few items:
The December 2015 end of month balance on the bank statement for cash Account #100 was $67,201.
On 12/31, you noted that the bank charged Wrigley Inc. $25 for a monthly service fee and $30 for ordering another set of checks.
The bank called on January 2nd, 2016 to let you know that they accidentally deposited a check on December 28th written to Antony Rizzoli (CFO) into the Wrigley account rather than Anothy Rizzoli’s personal account.
The deposit was for $1,580. They corrected the accounts on January 3rd, 2016.
On 12/15, a customer’s check (Schwarber’s Inc) for $1,367 had non-sufficient funds.
In addition to not depositing the money into operating cash account, the bank charged Wrigley Inc.’s account a $10.00 fee due to the customer’s check bouncing.
You obtain the company’s unadjusted trial balance as of December 31, 2015. Per your review of the account balances, you identify that the company has a cash balance in Account #100 in the amount of $90,075.
You also noted that Acct #101 (the payroll cash account) has a balance of $15,402.
You identify that the company has written $15,200 in checks that have not cleared the bank as of the end of December.
On December 31, 2015, the cashier for the company deposited $38,402 from customer checks into the operating cash account. This 12/31 deposit is not on the December bank statement.
As you are reviewing the checks that cleared the bank, you identified that the insurance check that you wrote was correctly written for $1,460 on December 1st. After reviewing the insurance policy bill – you identified that the premium payment needed to be $1,460.
However, you identified that the accounting clerk made the following entry on Dec. 1st (you do not need to investigate the adjusting entry for end of December in relation to the insurance expense):
Prepaid Insurance 1,640
Instructions: Prepare the company’s bank reconciliation for December 2015. Also, prepare the Dec. 31st journal entries to correct the ending cash balance.