Question

The information relates to the Cash Account in the ledger of Covid Company : Balance June 1 $7,150 ; cash deposited $64,000; Balance June 30 $17,404 ; checks written $63,746. The June bank statement shows a balance of $16,122 on June 30. The following are memoranda from bank : Collection of $1,500 note plus interest $30; Interest earned on checking account $45; NSF check from Violet Jones $725; Safety deposit box rent $65. At June 30, deposits in transit were $4,450 and outstanding checks totaled $2,383.

Prepare adjusting entries for adjusted cash balance at June 30

Prepare bank reconciliation at June 30 per book side

Answer 1

a)Bank reconciliation at June 30 per book side is as follows:

Note: As a mentioned in the question the bank reconciliation statement is prepared at June 30 per book side only.

	$	$
Cash balance as per Books		17,404
Add: Collection of note with interest ($1,500 + $30)	1,530
Interest earned	45	1,575
Subtract:
NSF check from Violet Jones	(725)
Safety deposit box rent	(65)	(790)
Adjusted Cash Balance		$18,189

b) Adjusting entries for adjusted cash balance at June 30 is as follows:

Transactions	Account and Explanation	Debit ($)	Credit($)
1)	Cash	1,500
	Note Receivable		1,500
	(Recorded the collection of notes)
2)	Cash	30
	Interest Revenue		30
	(Recorded the collection of interest )
3)	Account Receivable - Violet Jones	725
	Cash		725
	(Recorded the payment of cash)
4)	Bank Charges	65
	Cash		65
	(Recorded the payment of bank charges)