Beaver Company has a December 31 year end.
They just received their bank statement for
January 31, 2011 with an ending balance of $30,390.
The details of the bank statement are as follows:
Balance, January 1, 2011
Deposit, January 5, 2011
Cheque 147 - Electricity Co.
Automatic Deduction - Hydro
Deposit, January 15, 2011
The chief accountant is on vacation and you have been asked to prepare a bank
reconciliation for the company.
Upon your review of his work, you realize that the only
things the chief accountant recorded were deposits made by the company, thus
overstating their cash balance. The final deposit was made on January 31, 2011 for $
4,610. On the same day, the chief accountant also wrote a cheque to the receptionist for
$2,000, her monthly salary.
You noted that the company had an ending cash balance of $37,290, as of January 31, 2011.
(1) Prepare a bank reconciliation to reconcile the cash balances, per bank and the company.
(2) Prepare any necessary journal entries for the company