You are doing the first year audit for Sugar and Spice and have been assigned

responsibility for doing a fourcolumn proof of cash for the month of December, 2009.
You obtain the following information:
1.

Balance per books - adjusted

November 30

$15,555

2.

Deposits in transit

November 30
December 31

10,451
5,739

3.

Outstanding checks

November 30
December 31

1,811
2,615

4.

Service charge charged by the bank

December 31

25

5.

Interest on a bank loan for the month of December, charged by

the bank but not recorded

December 31

148

6.

Balance per bank - unadjusted

December 31

10,243

7.

Proceeds from a note of the Simmons Company were collected

by the bank in December but were not entered on the books:

8.

On December 15, a check for $888 of the Stone Company was

charged to the Sugar and Spice account by the bank in error.

9.

Dishonored checks are not recorded on the books unless they

permanently fail to clear the bank. The bank treats them as
disbursements when they are dishonored and deposits when they
are re-deposited. Checks totaling $1,722 were dishonored in
December; $1,247 was re-deposited in December and the
remaining amount re-deposited in January 2010.

10. On December 31, a deposit for $150 was deposited by the bank
to the Sugar and Spice account that should have been posted by
the bank to Sugar and Cinnamon Cookies accounting.
11. Cash receipts for December

Principal
Interest
Total

3,000
287
3,287

Per books

20,121

INSTRUCTIONS:
A. Prepare a four-column proof of cash for the month ended December 2009. It should show both
adjusted and unadjusted cash. There should be a proper heading with company name, proof of cash,
and the appropriate date.
B. Prepare your Proof of Cash in excel if possible. It should make the assignment easier.
C. After completing the proof of cash, on a separate page, prepare all adjusting general ledger entries in
proper form. Your adjusting entry document should have a proper heading with company name,
adjusting general ledger entries, and the appropriate date. An example of how an adjusting entry
should look is as follows.

Sugar and Spice

Adjusting General Ledger Entries
For the Month of December 2009

December 31, 2009

Miscellaneous Expense
Cash
To record the bank service charge for the month of October,
2009.

Debits
$30.00

Credits
$30.00

This is an example journal entry so do not include it with your official answer unless you need it to balance
your work.