Question

Everest Ltd’s bank reconciliation clerk is trying to reconcile the bank balance at 31 July 2019. The balance of the Cash at Bank account, before any entries for transactions initiated by the bank, was $2,930 in the company records.

On 31 July 2019, Everest Ltd has following information.

1. The bank statement balance is $2,306.
2. The Cash at Bank account balance is $2,930
3. Unpresented cheques totalled $585.
4. Outstanding deposit $1,175.
5. The bank service charge is $25.
6. A cheque for $98 was paid for supplies. However, this transaction was recorded as a credit of $89 in the Cash at Bank account and a debit of $89 in the supplies account.

Using the above information, answer the following questions.

Required

1. Prepare a correct bank reconciliation
2. Prepare the General Journal entries required by the reconciliation. Narrations not needed
3. Post the above entries to the Cash at Bank General Ledger account

Answer 1

Part 1

BANK RECONCILIATION

	($)		($)
Unreconciled General Ledger		Unreconciled Bank Statement
Cash balance at July 31	2,930	Bank balance at July 31	2,306
Less:		Less:
Service Charge	(25)	Unpresented cheques	585
error in check paid for supplies	(9)	Outstanding Deposit	(1,175)
Adjusted General Ledger		Adjusted Bank Balance
Cash balance on July 31	2,896	July 31	2,896

.

Part 2

JOURNAL

Account Titles and Explanations	Debit	Credit
Bank Service Charge	25
Cash		25
(to record Bank Service Charge)
Supplies	9
Cash		9
(To record error rectification for payment)

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Part 3

CASH AT BANK

Date	Description	($)	Date	Description	($)
July 31	Unreconciled Balance	2,930	July 31	Service Charge	25
				Supplies	9
				Reconciled Balance	2,896
		2,930			2,930

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