General Instructions
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
E6-1
75,000$
150,000
125,000
25,000
65,000
100,000
500,000
Cash equivalents at December 31, 2016:
of cash flows for the year ended December 31, 2016.
Required
Investment in stock
90-day Treasury bills
Treasury note, due December 1, 2046
Determine the amount of cash equivalents that should be combined with cash on the
Systematic Enterprises invested its excess cash in the following instruments during
December 2016:
Certificate of deposit, due January 31, 2019
Certificate of deposit, due March 30, 2017
Commercial paper, original maturity date February 28, 2017
Deposit into a money market fund
Cake N Cookies (party for retiring employee)
Office Supply Superstore (paper, pencils)
A count of the cash in the drawer on January 31 revealed a balance of $74.10. The treasurer wrote and cashed
a check on the same day to restore the fund to its original balance of $300.
U.S. Post Office (stamps)
On January 2, Carson Car Rentals decided to set up a petty cash fund. The treasurer established the
fund by writing and cashing a $300 check and placing the coin and currency in a locked petty cash drawer.
Earl Paxton was designated as the custodian for the fund. During January, the following receipts were
given to Paxton in exchange for cash from the fund:
BALANCE SHEET
INCOME STATEMENT
BALANCE SHEET
INCOME STATEMENT
General Instructions
2. The blue cells are for data entry. Enter text in the T cells, formulas in the F cells, and
dollars or numbers in the $ cells.
P6-1A
The following information is available to assist you in preparing a bank reconciliation for
Karen’s Catering on March 31:
g. The comparison of checks cleared per the bank statement with those per the books revealed that the wrong
machine encoded the check in the amount of $909.
collection fee of $4.50 was charged.
e. Interest earned on the checking account and added to Karen’s account during March was $4.30.
Miscellaneous bank service charges amounted to $22.
d. The bank acts as a collection agency for checks returned for insufficient funds. The March bank
statement indicates that one such check in the amount of $45.00 was collected and deposited and a
Required
6,506.10$
KAREN’S CATERING
BANK RECONCILIATION
MARCH 31
Balance per bank statement, March 31
1. Prepare a bank reconciliation statement and determine the balance on the books before any
adjustments as well as the corrected balance to be reported on the balance sheet.
a. The balance on the March 31 bank statement is $6,506.10.
b. Not included on the bank statement is a $423 deposit made by Karen’s late on March 31.
c. A comparison between the canceled checks listed on the bank statement and the company
records indicated that the following checks are outstanding at March 31:
81.00 (517.17)
6,411.93$
$909 charged against the account
Adjusted balance, March 31
Customer check not recorded
Collection fee
Bank service charges
Adjusted balance, March 31
Karen has an ethical responsibility to tell the bank and the payee about the error of $81.00 in (g). Even though
Customer check collected
Interest earned on account
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
3. The completed exercise/problem may be printed or e-mailed per direction from your instructor.
P6-1
d. The Cash account on the company’s books shows a balance of $9,965.34
e. The bank acts as a collection agency for interest earned on some municipal bonds held by Calico Corners. The May
bank statement indicates interest of $465.00 earned during the month.
f. Interest earned on the checking account and added to Calico Corners’ account during May was $54.60. Miscellaneous
bank service charges amounted to $50.00.
g. A customer’s NSF check in the amount of $166.00 was returned with the May bank statement.
the following checks are outstanding at May 31:
Required
1. Prepare a bank reconciliation in good form.
CALICO CORNERS
BANK RECONCILIATION
MAY 31
h. A comparison between the deposits listed on the bank statement and the company’s books revealed that a customer’s
check in the amount of $123.45 was recorded on the books during May but was never added to the company’s account.
The bank erroneously added the check to the account of Calico Closet, which has an account at the same bank.
i. The comparison of deposits per the bank statement with those per the books revealed that another customer’s check in
the amount of $101.10 was correctly added to the company’s account. In recording the check on the company’s books,
however, the accountant erroneously increased the Cash account by $1,011.00.
The following information is available to assist you in preparing a bank reconciliation for Calico Corners on May 31:
a. The balance on the May 31 bank statement is $8,432.11.
b. Not included on the bank statement is a $1,250 deposit made by Calico Corners late on May 31.
c. A comparison between the canceled checks returned with the bank statement and the company records indicated that
−Expenses = Net Income
BALANCE SHEET
INCOME STATEMENT
Assets
8,432.11$
Add: 1,250.00$
123.45 1,373.45
Deduct:
May 31 Cash 519.60
Interest Revenue 519.60
To record interest earned.
= Liabilities + Stockholders’ Equity Revenues
−Expenses = Net Income
Cash (50.00) (50.00) Bank Service (50.00)
Fees Exp. 50.00
BALANCE SHEET
INCOME STATEMENT
Assets
2. Record the necessary journal entries on the company’s books resulting from the bank reconciliation prepared
in part (1) above.
Deposit in transit
Bank error: deposit credited to wrong account
Outstanding checks:
Balance per bank statement, May 31
Bank service charges
NSF Check
Book error: Deposit of $101.10 recorded as $1,011.00
Interest earned on bonds
Interest earned on account
Cash 166.00
To record customer’s NSF check.
May 31 Accounts Receivable 909.90
Cash 909.90
To correct error in recording customer’s check.
3. A friend says to you: “I don’t know why companies bother to prepare bank reconciliations—it seems a waste
of time. Why don’t they just do like I do and adjust the Cash account for any difference between what the bank
shows as a balance and what shows up in the books?” Explain to your friend why a bank reconciliation should
be prepared as soon as a bank statement is received.