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. The October 31,
2018, bank statement included the following information:
| Balance, October 1, 2018 | $ | 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, 2018 | $ | 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.
Solutions
Expert Solution
| 1 | THE FITZGERALD COMPANY | |||||
| Bank Reconciliation | ||||||
| October 31, 2018 | ||||||
| $ | ||||||
| Cash Balance as per Bank Statement | 38,140 | |||||
| Add: | Deposit in Transit | 4,224 | ||||
| 42,364 | ||||||
| Less: | Oustanding Cheque | 5,620 | ||||
| Adjusted Cash Balance as per Bank | 36,744 | |||||
| Cash Balance as per Books | 42,544 | |||||
| Less: | Bank Service Charges | 350 | ||||
| Check Error | 450 | |||||
| Loan Payment | 3,400 | |||||
| NSF Checks | 1,600 | |||||
| Adjusted Cash Balance as per Books | 36,744 | |||||
| Correct Balance for the cash account as of October 31, 2018 is $36,744 | ||||||
| 2 | Journal enteries | |||||
| THE FITZGERALD COMPANY | ||||||
| Debit | Credit | |||||
| 1 | Service Charges | $ 350 | ||||
| Cash | $ 350 | |||||
| ( Bank Service Charges recorded) | ||||||
| 2 | Funiture ( Asset) | $ 450 | ||||
| Cash | $ 450 | |||||
| ( Rectification of the check wrongly recorded) | ||||||
| 3 | Loan Payable | $ 3,000 | ||||
| Interest Expenses | $ 400 | |||||
| Cash | $ 3,400 | |||||
| ( Loan and interest paid directly by bank) | ||||||
| 4 | Accounts Receivable | $ 1,600 | ||||
| Cash | $ 1,600 | |||||
| ( Nsf Check) | ||||||
| Thank You.. | ||||||
ekkarill92 answered 3 weeks agoRelated Solutions
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