Gloria makes bank deposits, pays the company’s bills, maintains the accounting records, and prepares monthly bank reconciliations
January 3, 2018
The ACH credit on 9/22/2019 was an electronic funds payment received on account from Edwards UK, a credit customer located in Great Britain
January 3, 2018

Analyze: If the errors described had not been corrected, would net income for the period be overstated or understated?

During the bank reconciliation process at A. Fontes Consultancy on May 2, 2019, the following two errors were discovered in the firm’s records. a. The checkbook and the general journal indicated that Check 2206 dated April 17 was issued for $695 to make a cash purchase of supplies. However, examination of the canceled check and the listing on the bank statement showed that the actual amount of the check was $14. b. The checkbook and the general journal indicated that Check 2247 dated April 20 was issued for $130 to pay a utility bill. However, examination of the canceled check and the listing on the bank statement showed that the actual amount of the check was $164. INSTRUCTIONS 1. Prepare the adjusted book balance section of the firm’s bank reconciliation statement. The book balance as of April 30 was $20,275. The errors listed above are the only two items that affect the book balance. 2. Prepare general journal entries to correct the errors. Use page 11 and date the entries April 30, 2019. Check 2206 was correctly debited to Supplies on April 17 and Check 2247 was debited to Utilities Expense on April 20. Analyze: If the errors described had not been corrected, would net income for the period be overstated or understated? By what amount? View Solution:
During the bank reconciliation process at A Fontes Consultancy on

 

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