Bill’s Lawn Care Module 4 Mini Practice Problem

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Bill’s Lawn Care Module 4 Mini Practice Problem

In June, Billcommented to you that he could never figure out his bank statement, “it never matches the balance in my accounting records” he tells you.  So you explain that a bank reconciliation is a tool used to balance the bank statement to the accounting books.  He gives you his bank statement for June, 2014 (shown below).  The general ledger shows a balance for the account cash of $19,319.00 on June 30, 2014 (detail transactions below). Bill’s business only has one checking account and no other cash accounts.

Instructions:

1.  Using the bank statement and the general ledger, prepare a bank reconciliation for Bill’s Lawn Care as of June 30, 2014. Record the necessary journal entries to adjust the books for the appropriate reconciling items.  Start with Page 6 for the journal entries.  Explanations are optional.

CHECKING ACCOUNT DETAIL:

DATE

TRANSACTION

TYPE & NUMBER

AMOUNT

BALANCE

BEGINNING BALANCE

$17,850.00

6/2/2014

CHECK #1570

226.00

17,624.00

6/5/2014

CHECK #1571

83.00

17,541.00

6/6/2014

EFT #43

127.00

17,414.00

6/10/2014

DEPOSIT #104

1,550.00

18,964.00

6/15/2014

CHECK #1572

145.00

18,819.00

6/15/2014

CHECK #1573

185.00

18,634.00

6/20/2014

DEPOSIT #105

885.00

19,519.00

6/24/2014

EFT #44

143.00

19,376.00

6/28/2014

CHECK #1574

87.00

19,289.00

6/28/2014

CHECK #1575

95.00

19,194.00

6/30/2014

DEPOSIT #106

425.00

19,619.00

6/30/2014

CHECK #1576

155.00

19,464.00

6/30/2014

CHECK #1577

145.00

$19,319.00

BANK STATEMENT:

FIRST NATIONAL BANK

 

 

ACCOUNT SUMMARY JUNE 30, 2014

BEGINNING BALANCE

$17,850.00

PAYMENTS

$1,021.00

DEPOSITS

2,440.00

FEES

35.00

ENDING BALANCE

$19,234.00

PAYMENTS

DATE

REFERENCE

AMOUNT

6/5/2014

1570

$266.00

6/9/2014

1571

83.00

6/10/2014

43

127.00

6/19/2014

1572

145.00

6/28/2014

1573

185.00

6/28/2014

NSF

120.00

6/30/2014

1575

95.00

TOTAL PAYMENTS

$1,021.00

DEPOSITS

DATE

REFERENCE

AMOUNT

6/11/2014

104

$1,550.00

6/23/2014

105

885.00

6/30/2014

INTEREST

5.00

TOTAL DEPOSITS

$2,440.00

FEES

6/30/2014

SVC CHG

$35.00

TOTAL FEES

$35.00

Additional Information:  Check #1570 was written for $266.00, but was recorded incorrectly in the general ledger. The check was for fuel.

Bill’s Lawn Care

Chart of Accounts

Classification

Account Number

Account Name

ASSETS

101

Cash

110

Accounts Receivable

112

Allowance for Doubtful Accounts

115

Notes Receivable

116

Interest Receivable

120

Supplies

130

Prepaid Insurance

140

Inventory

150

Equipment

155

Accumulated Depreciation – Equipment

LIABILITIES

201

Accounts Payable

220

Notes Payable

225

Interest Payable

OWNER’S EQUITY

301

Owner’s Capital

305

Owner’s Drawings

310

Income Summary

REVENUES

401

Lawn Service Revenue

410

Sales Revenue

415

Sales Returns and Allowances

420

Interest Income

COST OF GOODS SOLD

501

Purchases

505

Purchase Returns and Allowances

EXPENSES

620

Supplies Expense

630

Fuel Expense

640

Repair and Maintenance Expense

650

Advertising Expense

660

Insurance Expense

670

Depreciation Expense

680

Interest Expense

690

Bad Debt Expense

695

Miscellaneous Expense

 

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