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, 2016.

On July 31, the company’s Cash account has a $25,648 debit balance, but its July bank statement shows a $28,486 cash balance.

Check No. 3031 for $1,720 and Check No. 3040 for $852 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 $636 and Check No. 3069 for $2,488, both written in July, are not among the canceled checks on the July 31 statement.

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 was correctly written and drawn for $1,290 but was erroneously entered in the accounting records as $1,280.

A credit memorandum enclosed with the July bank statement indicates the bank collected $6,000 cash on a non-interest-bearing note for Branch, deducted a $30 collection fee, and credited the remainder to its account. Branch had not recorded this event before receiving the statement.

A debit memorandum for $805 lists 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.

Enclosed with the July statement is a $9 debit memorandum for bank services. It has not yet been recorded because no previous notification had been received.

Branch’s July 31 daily cash receipts of $7,152 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

1. Prepare the bank reconciliation for this company as of July 31, 2016. 2-Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of July 31, 2016

Answer 1

				Bank Reconciliation
Bank Statement balance				28,486	Book Balance					25,648
Add					Add:
Deposit of July 31			7,152		Proceeds of note less collection charge				5970
				7,152						5,970
				35,638						31,618
Deduct:					Deduct:
check no 3031			1,720		NSF Check				805
check no 3065			636		Service Charge				9
check no 3069			2,488		Error (Check 3056)				10
				4,844						824
Adjusted bank balance				30,794						30,794
			Journal Entries
	Date	General Journal					Debit	Credit
	uly 31	Cash					5,970
		Collection expense					30
		Note receivable						6,000
		(being note collected)
	31-Jul	Account receivable-shaw					805
		cash						805
		(being NSF)
	31-Jul	Miscellaneous expense					9
		cash						9
		(being service charge)
	31-Jul	Rent expense					10
		cash						10
		(beig error rectified)