Question

The cash account for Corey’s Construction Company at August 31, 2018, indicated a book balance of $19,885. The bank statement received by the company indicated a balance of $39,473.63 as at August 31, 2018. A comparison of the bank statement and the accompanying cancelled cheques and memos with the records revealed the following:

A deposit of $6,794.62 was received by the bank on August 31 after the bank statement was prepared.

Cheques #251 for $1,200 and #260 for $1,333.25 were not presented to the bank for encashment as at August 31, 2018.

The bank erroneously debited a cheque drawn Corey’s Construction as $16,000 instead of $1,600.

The company’s accountant recorded a $3,500.00 cheque for payment of accounts payables as $35,000

The bank credited a deposit of $200 as $2,000 to Corey’s Construction account.

A cheque for $13,500 from a customer Ali Woods was returned for insufficient funds. The bank charged $50 for Wood’s NSF cheque. The company’s policy states that the bank charges associated with NSF cheques are to be recovered from the customer.

A note was collected by the bank of $21,000 on August 31 which included interest of $1,500. A debit memo from the bank showed service charge amounting to $2,500 as at August 31, 2018

Required: 1.Prepare the necessary journal entries for Corey’s Construction Company at August 31, 2018.

2.Prepare Corey’s Construction Company adjusted cash book for August 31st. 2018.

3.Prepare Corey’s Construction Company bank reconciliation statement for August 31, 2018.

Answer 1

1.Journal entries for Corey's Construction company at August 31,2018

Date	Particulars	Debit(in $ )	Credit(in $ )
31/08/2018	Cash A/c.....Dr	33,500
	To Accounts payable A/c		33,500
	(Being Error done by accountant by recording 35000 instead of 3500 now difference amount of ($31500) reversed to get actual cash balance
31/08/2018	Ali woods A/c .....Dr	13550
	To Cash A/c		13500
	To Bank charges A/C		50
	(Being cheque dishonoured and bank charges to be recovered from customer A/c)

2. Adjusted Cash book of Corey construction company as at 31/08/2018

Dr. Adjusted Cash book. Cr.

Date	Particulars	Amount	Date	Particulars	Amount
Aug-31	To balance C/f(Before adjustment)	$19,885	Aug-31	By Aliwoods A/c	$ 13,500
Aug-31	To accounts payable	$ 33,500
			Aug-31	By Balance C/f( after adjustments) Balancing figure	$ 39,885
		$ 53885			$ 53885

3.Bank reconciliation statement of Cory construction company as at August 31-2018  

  Bank reconciliation statement

Particulars	Amount	Amount
Cash balance as on 31-08-2018(Before adjustments)		$ 19,885
Less
a) Cheque deposited but not collected	$6,794.62
B) Erroneous (excess debit) to be reduced (16000-1600)	$14,400
C) Cheque dishonoured	$13,500
D) Bank charges on cheque dishonoured	$50
E) Bank service charges on note collection	$2,500
		$(37,244.62)
Add
A) Cheques issued but not presented (#251=1200,#260=1333.25)	$2,533.25
B) Excess amount of Account payables	$ 33,500
C) Excess payment reversed (2000-200)	$ 1,800
D) Note collected by bank	$ 19,500
E) Interest on note collected	$ 1500
		$ 56,833.25
Bank Balance as on 31-08-2018		$ 39473.63

Note:-

I had taken Non adjusted Cash balance and adjustments represented again, if you are interested in taking adjusted Cash balance then take that balance you can get also same answer( but Dont forget to not take adjustments of cash again )