Question
In: Accounting
The Fitzgerald Company maintains a checking account at the Bank of the North. The bank provides...
The Fitzgerald Company maintains a checking account at the Bank
of the North.
The bank provides a bank statement along with canceled checks on
the last day of each month. T
he October 31, 2016, bank statement included the following
information:
Balance, October 1, 2016 $ 32,690
Deposits 86,000
Checks processed -75,200
Service charges -350
NSF checks -1,600
Monthly loan payment deducted
directly by bank from account
(includes $400 in interest)
(3,400)
Balance, October 31, 2016 $38,140
The company's general ledger cash (checking) account had a balance
of $42,544 at the end of October.
Deposits outstanding totaled $4,224, and all checks written by the
company were processed by the bank
except for those totaling $5,620. In addition, a check for $500 for
the purchase of office furniture was
incorrectly recorded by the company as a $50 disbursement. The bank
correctly processed the check
during October.
Required:
1. Prepare a bank reconciliation for the month of October.
2. Prepare the necessary journal entries at the end of October to
adjust the general ledger cash account.
Use the Excel file template provided.
Solutions
Expert Solution
1. Bank reconciliation for the month of October is:
| Fitzgerald Company | ||
| Bank Reconciliation | ||
| October 31, 2016 | ||
| Particulars | Amount ($) | Amount ($) |
| Unadjusted bank Balance, October 31, 2016 | 38,140.00 | |
| Add: Deposit in transit | 4,224 | |
| Less: outstanding checks | 5,620 | |
| True cash balance, October 31, 2016 | 36,744.0 | |
| Unadjusted book Balance, October 31, 2016 | 42,544.00 | |
| Less: | ||
| Check for office furniture recorded incorrectly as 50 instead of 500 | 450 | |
| Bank Service charges | 350 | |
| NSF Checks | 1,600 | |
| Monthly loan payment including interest | 3,400 | |
| True cash balance, October 31, 2016 | 36,744.0 | |
2. Necessary journal entries at the end of October to adjust the general ledger cash account is as prepared below:
| Date | Particulars | L.F | Amount ($) | Amount ($) |
| 2016 | ||||
| Oct-31 | Bank Service Charges | 350 | ||
| Cash | 350 | |||
| (For bank service fees) | ||||
| Oct-31 | Loan Payable | 3,000 | ||
| Interest expense | 400 | |||
| Cash | 3,400 | |||
| (For cash piad on loan) | ||||
| Oct-31 | Account Receivable | 1,600 | ||
| Cash | 1600 | |||
| (for NSF check) | ||||
| Oct-31 | Office Furniture | 450 | ||
| Cash | 450 | |||
| (for check for office furniture) |
ekkarill92 answered 2 years agoRelated Solutions
The Fitzgerald Company maintains a checking account at the Bank of the North. The bank provides...
The Fitzgerald Company maintains a checking account at the Bank
of the North. The bank provides a bank statement along with
canceled checks on the last day of each month. The October 31,
2016, bank statement included the following information:
Balance, October 1, 2016
$
32,590
Deposits
81,000
Checks processed
(70,200)
Service charges
(250)
NSF checks
(1,500)
Monthly loan payment deducted
directly by bank from
account
(includes $300 in
interest)
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Balance, October 31, 2016
$
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Service charges
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NSF checks
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Balance, July 1, 2021
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Deposits
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Checks processed
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Service charges
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Service charges
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NSF checks
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NSF checks
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