Question

On 31 July, Brian Company’s Cash at Bank account had a credit balance of $4 647.50. The following information is made available by the company for you to prepare a bank reconciliation for July:

1. Deposit in-transit 31 July amounted to $1 015.30.
2. Outstanding cheques 31 July amounted to $530.00.
3. The bank statement at the end of July indicated a debit balance of $2 000.00.
4. The bank incorrectly deposited a $799.20 cheque of Bright Company against Brian’s bank account.
5. A $10 bank service charge has not yet been recorded on the book.
6. Brian Company neglected to record $4 500 of a borrowing from the bank on a 14% interest. The bank statement shows the $4 500 deposit and an interest charge of $52.5 of the month.
7. The bank statement shows that Kulka’s cheque for $514.50 had been dishonoured. Kulka the customer had sent the cheque to pay an account of $525 less 2% discount.
8. Brian Company recorded a $734 payment for repairs expense as $743.

Required:

Prepare a bank reconciliation statement for Brian Company as at 31 July to adjust both, the bank statement and the book record.
Prepare the general journal entries necessary to bring the cash at bank account into agreement with the adjusted balance on the bank reconciliation statement (ignore GST and narrations).

Answer 1

	Brian Company
	Bank Reconciliation Statement
	Jul-31
	balance as per bank statement	-2000.00
	Add: Deposit in Transit	1015.3
	Add: BANK ERROR
	Less: Outstanding checks	-530
	Less: BANK ERROR	799.2
	Adjusted Cash Balance	-715.5
	Cash balance as per books	-4647.50
	Add: Note Collected by bank	4500
	Add: Error in payment check	9
	Less: Interest Paid	-52.5
	Less: Bank collection fees	-10
	Less: NSF Checks	-514.5
	Adjusted Cash Balance	-715.5
	Journal Entry
1	Bank Charges	10
	Cash		10
	(being bank charges recorded)
2	Accounts Receivable	525
	Cash		514.5
	Sales Discount		10.5
	(To record NSF Check)
3	Interest Expense	52.5
	Cash		52.5
	(To record interest Expense)
4	Cash	9
	Accounts Payable		9
	(To correct the payment error)
6	Cash	4500
	Note Receivable		4500
	(being note collected)