Question

Noland Boat Company's bank statement for the month of September showed a balance per bank of $7,000. The company's Cash account in the general ledger had a balance of $4,667 on September 30. Other information is as follows:

(1)    Cash receipts for September 30 recorded on the company's books were $4,200 but this amount does not appear on the bank statement.

(2)    The bank statement shows a debit memorandum for $40 for check printing charges.

(3)    Check No. 119 payable to Lynch Company was recorded in the cash payments journal and cleared the bank for $248. A review of the accounts payable subsidiary ledger shows a $36 credit balance in the account of Lynch Company and that the payment to them should have been for $284.

(4)    The total amount of checks still outstanding at September 30 amounted to $5,800.

(5)    Check No. 138 was correctly written and paid by the bank for $429.  The cash payment journal reflects an entry for Check No. 138 as a debit to Accounts Payable and a credit to Cash in Bank for $492.

(6)    The bank returned an NSF check from a customer for $550.

(7)    The bank included a credit memorandum for $1,260 which represents collection of a customer's note by the bank for the company; principal amount of the note was $1,200 and interest was $60. Interest has not been accrued.

Instructions

(a)     Prepare a bank reconciliation for Noland Boat Company at September 30.

(b)    Prepare any adjusting entries necessary as a result of the bank reconciliation.

Answer 1

Solution 1:

Noland Boat company
Bank Reconciliation
Sep-30
Bank Statement Balance		$7,000	Cash Balance per Company's Records		$4,667
Add:			Add:
Deposit in transit	$4,200		Note Collection plus interest	$1,260
		$4,200	Error in recording check no 138 (492-429)	$63	$1,323
Subtotal		$11,200	Subtotal		$5,990
Deduct:			Deduct:
Outstanding checks	$5,800		NSF Check	$550
		$5,800	Check printing Charges	$40	$590
Adjusted Bank Balance		$5,400	Adjusted Cash Balance		$5,400

Solution 2:

Journal Entries
S.No	Particulars	Debit	Credit
1	Cash Dr	$1,260.00
	To Note Receivable		$1,200.00
	To Interest Revenue		$60.00
	(To record Note Collection)
2	Cash Dr	$63.00
	To Accounts payable		$63.00
	(To correct error of Check no. 138)
3	Accounts Receivable Dr	$550.00
	To Cash		$550.00
	(To record NSF Check from customer)
4	Miscellaneous Expenses Dr	$40.00
	To Cash		$40.00
	(To record Printed checks charges debited by bank)