Question

The following information was available to reconcile Montrose Company’s book balance of Cash with its bank statement balance as of October 31, 2017:

a.	After all posting was completed on October 31, the company’s Cash account had a $17,673 debit balance, but its bank statement showed a $39,247 balance.
b.	Cheques #296 for $1,784 and #307 for $17,056 were outstanding on the September 30 bank reconciliation. Cheque #307 was returned with the October cancelled cheques, but cheque #296 was not. It was also found that cheque #315 for $1,194 and cheque #321 for $2,675, both written in October, were not among the cancelled cheques returned with the statement.
c.	In comparing the cancelled cheques returned by the bank with the entries in the accounting records, it was found that cheque #320 for the October rent was correctly written for $5,080 but was erroneously entered in the accounting records as $5,800.
d.	A credit memo enclosed with the bank statement indicated that there was an electronic fund transfer related to a customer payment for $22,900. A $160 bank service charge was deducted. This transaction was not recorded by Montrose before receiving the bank statement.
e.	A debit memo for $4,335 listed a $4,269 NSF cheque plus a $66 NSF charge. The cheque had been received from a customer, Jefferson Tyler. Montrose had not recorded this bounced cheque before receiving the statement.
f.	Also enclosed with the statement was a $99 debit memo for bank services. It had not been recorded because no previous notification had been received.
g.	The October 31 cash receipts, $3,105, were placed in the bank’s night depository after banking hours on that date and this amount did not appear on the bank statement.

Required:
1. Prepare a bank reconciliation for the company as of October 31, 2017.     

2. Prepare the General Journal entries necessary to bring the company’s book balance of Cash into agreement with the reconciled balance. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• 1

  Record the collection of note less collection fee.

• 2

  Record the NSF cheque.

• 3

  Record the bank service charges.

• 4

  Record to correct error in Cheque #320.

Answer 1

1	Montrose Company
	Bank Reconciliation
	For the month ending October 31, 2017
	Company's Book			Bank Books
	Book balance		$17,673	Bank statement balance		$39,247
	Add: Error in recording	$720		Add:Deposit in transit		$3,105
	Fund transfer from customer less collection charge	$22,740	$23,460			$42,352
			$41,133
	Less: Service charges	$99		Less: Outstanding cheque
	NSF Cheque including charges	$4,335	$4,434	Cheque#296	1784
				Cheque#315	$1,194
				Cheque#321	$2,675	$5,653
	Adjusted book balance		$36,699	Adjusted bank balance		$36,699
2
Event	General Journal	Debit	Credit
1	Cash	$22,740
	Collection expense	$160
	Accounts Receivable		$22,900
2	Accounts Receivable	$4,335
	Cash		$4,335
3	Miscellaneous expenses	$99
	Cash		$99
4	Cash	$720
	Rent Expenses		$720