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Leslie A. Burns prepared this case under the supervision of Richard H. Mimick solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.
Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written
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Jacob Walker, owner and operator of Merlin’s Magic Mansion (MMM), sat hunched over at his desk.
Walker had been under a great deal of pressure lately and the situation was looking bleaker every day.
Walker’s patience was definitely running low (see Exhibit 1 for the bank statement). Of all the dilemmas
facing him, Walker particularly worried about the company’s cash position.
Walker realized that there was a discrepancy between the bank statement’s cash figure and the cash figure
he expected. In the past, he remembered the bookkeeper had solved this problem by using the cheque
register, the deposit records, and the last month’s bank reconciliation (see Exhibit 2, 3, and 4). With the
bookkeeper gone and no one else to turn to, Walker made himself more comfortable at his desk and
readied himself for the task before him.
REQUIRED:
1. As Jacob Walker, prepare a bank reconciliation as of April 30, 2005. Assume any cheque or deposit
errors were made by MMM.
2. Make any necessary correcting entries to ensure MMM’s ending cash balance is correct.
3. What should be the amount of cash on Merlin’s Magic Mansion’s balance sheet at April 30, 2005?
Page 2 9A87K013
Exhibit 1
BANK STATEMENT
1
Bank debit memo for cheque returned because of insufficient funds.
Exhibit 2
CHEQUE REGISTER
April 2005
DEPOSIT SLIPS
For the month ending April 30, 2005
DATE AMOUNT
April 2 $ 429.01
7 482.75
9 455.05
14 499.56
16 331.45
21 493.70
23 435.55
28 708.56
30 300.55
Total $ 4,136.18
Exhibit 4
BANK RECONCILIATION
For month ending March 31, 2005