Posted: April 10th, 2016

Prepare a bank reconciliation in good form?

P5-4A

The following condensed income statements and balance sheets are available for Planter Stores for a two-year period. (All amounts are stated in thousands of dollars.)

Income Statements FY2012 FY2011
Revenues $35,982 $26,890
Cost of goods sold 12,594 9,912
Gross profit $23,388 $16,978
Operating expenses 13,488 10,578
Net income $9,900 $6,400

Balance Sheets December 31, 2012 December 31, 2011
Cash $9,400 $4,100
Inventory 4,500 5,400
Other current assets 1,600 1,250
Long-term assets, net 24,500 24,600
Total assets $40,000 $35,350

Current liabilities 9,380 10,600
Capital stock 18,000 18,000
Retained earnings 12,620 6,750
Total liabilities and stockholders’ equity $40,000 $35,350

Before releasing the 2012 annual report, Planter’s controller learns that the inventory of one of the stores (amounting to $500,000) was counted twice in the December 31, 2011, inventory. The inventory was correctly counted in the December 31, 2012 inventory.

1. Prepare revised income statements and balance sheets for Planter Stores for each of the two years. Ignore the effect of income taxes.

PROBLEM 6-1 Bank Reconciliation

The following information is available to assist you in preparing a bank reconciliation for Calico Corners on May 31, 2012:

a. The balance on the May 31, 2012, 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 the following checks are outstanding at May 31:
No. 123 $23.40
No. 127 145.00
No. 128 210.80
No. 130 67.32

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.

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 $1011.00.

1. Prepare a bank reconciliation in good form.