Question

The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017.

  

1. On July 31, the company’s Cash account has a $25,648 debit balance, but its July bank statement shows a $27,964 cash balance.
2. Check No. 3031 for $1,510 and Check No. 3040 for $747 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $531 and Check No. 3069 for $2,278, both written in July, are not among the canceled checks on the July 31 statement.
3. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent expense was correctly written and drawn for $1,280 but was erroneously entered in the accounting records as $1,270.
4. The July bank statement shows the bank collected $5,500 cash on a noninterest-bearing note for Branch, deducted a $28 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement.
5. The bank statement shows an $805 charge for a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
6. The July statement shows a $8 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
7. Branch’s July 31 daily cash receipts of $6,652 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

Problem 6-4A Part 1

Required:

1. Prepare the bank reconciliation for this company as of July 31, 2017.

Answer 1

Branch Company
Bank Reconciliation
At July 31
Updates to Bank Statement			Updates to Company's books
Ending cash balance as per bank statement		$ 27,964	Ending cash balance as per book		$ 25,648
Additions:			Additions:
Deposit in transit	$ 6,652		Note collected by bank ($5500-$28)	$ 5,472
		$    6,652			$    5,472
Deductions: Outstanding checks			Deductions:
#3031	1510		Error in recording of check #3056 ($1,280-$1,270)	$        10
#3065	$     531		NSF Check	$     805
#3069	$ 2,278		Bank service charge	$          8
		$    4,319			$        823
Up-to date ending cash balance		$ 30,297	Up-to date ending cash balance		$ 30,297

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