Question

When Pharoah Holdings Ltd. received its bank statement for the month of October, it showed that the company had a cash balance of $14,849 as at October 31. Pharoah’s general ledger showed a cash balance of $17,390 at that date. A comparison of the bank statement and the accounting records revealed the following information: 1. Bank service and credit card charges for the month were $7. 2. A cheque, in the amount of $520, from one of Pharoah’s customers that had been deposited during the last week of October was returned with the bank statement as “NSF.” 3. Cheque #3421, which was a payment for utilities expenses, had been correctly written for $860 but had been incorrectly recorded in the general ledger as $680. 4. Pharoah had written and mailed out cheques with a value of $2,430 that had not yet cleared the bank account. 5. During the month, the bank collected a $2,400 note receivable plus the outstanding interest of $216 on behalf of Pharoah. The interest had already been accrued. 6. The cash receipts for October 31 amounted to $6,880 and had been deposited in the night drop slot at the bank on the evening of October 31. These were not reflected on the bank statement for October.

Prepare the bank reconciliation at October 31. (List items that increase balance as per bank & books first.) PHAROAH HOLDINGS LTD. Bank Reconciliation October 31 NSF chequeCheque #3421 errorNote receivable collectionsInterest receivable collection on noteCash balance per bank statementBank service chargesDeposits in transitOutstanding chequesReconciled cash balance per bank $ Add Less : NSF chequeNote receivable collectionsReconciled cash balance per bankOutstanding chequesCash balance per bank statementBank service chargesDeposits in transitCheque #3421 errorInterest receivable collection on note Add Less : Outstanding chequesCash balance per bank statementInterest receivable collection on noteDeposits in transitNSF chequeCheque #3421 errorNote receivable collectionsBank service chargesReconciled cash balance per bank Bank service chargesCash balance per bank statementInterest receivable collection on noteNSF chequeDeposits in transitCheque #3421 errorOutstanding chequesReconciled cash balance per bankNote receivable collections $ Outstanding chequesNote receivable collectionsInterest receivable collection on noteBank service chargesNSF chequeDeposits in transitCheque #3421 errorReconciled cash balance per booksCash balance per books $ Add Less : Cash balance per booksNote receivable collectionsInterest receivable collection on noteCheque #3421 errorOutstanding chequesNSF chequeDeposits in transitBank service chargesReconciled cash balance per books $     Cash balance per books    Note receivable collections    Reconciled cash balance per books    Bank service charges    Interest receivable collection on note    Deposits in transit    NSF cheque    Cheque #3421 error    Outstanding cheques     Add Less :     Deposits in transit    Cheque #3421 error    Note receivable collections    Outstanding cheques    Cash balance per books    Reconciled cash balance per books    Bank service charges    Interest receivable collection on note    NSF cheque     $     Cheque #3421 error    NSF cheque    Interest receivable collection on note    Bank service charges    Deposits in transit    Reconciled cash balance per books    Note receivable collections    Cash balance per books    Outstanding cheques         Bank service charges    Deposits in transit    Outstanding cheques    Reconciled cash balance per books    NSF cheque    Note receivable collections    Cheque #3421 error    Cash balance per books    Interest receivable collection on note     NSF chequeCheque #3421 errorBank service chargesOutstanding chequesCash balance per booksReconciled cash balance per booksNote receivable collectionsInterest receivable collection on noteDeposits in transit $ SHOW LIST OF ACCOUNTS LINK TO TEXT

Prepare any journal entries required from the reconciliation. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Oct. 31 (To record EFT collections) (To record account receivable) (To adjust cheque #3421) 31 (To record bank service charge)

Answer 1

Bank Reconciliation Statement
balance as per Bank statement		14849	Balance as per books	17390
Add:					Add:
Deposits in transit			6880	Collection of note with interest	2616
Sub-total				21729				20006
Less:					Less:
Outstanding checks			2430	Service charges		7
					NSF check		520
					Utilities expense check	180
Adjusted balance as per bank statement	19299	Adjusted balance as per Books	19299
Adjusting entries
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Cash account			2616
	Notes receivable				2400
	Interest revenue				216
	(for note collected)
b.	Misc. expense			7
	Cash account				7
	(for service charges incurred)
c.	Accounts receivable			520
	Cash account				520
	(for NSf check)
d.	Utilities expense			180
	Cash account				180
	(for check recorded in error rectified)