Question

The following information applies to the questions displayed below.]

On October 31, 2018, the bank statement for the checking account of Blockwood Video shows a balance of $13,079, while the company’s records show a balance of $12,356. Information that might be useful in preparing a bank reconciliation is as follows:

a. Outstanding checks are $1,255.
b. The October 31 cash receipts of $810 are not deposited in the bank until November 2.
c. One check written in payment of utilities for $142 is correctly recorded by the bank but is recorded by Blockwood as a disbursement of $412.
d. In accordance with prior authorization, the bank withdraws $455 directly from the checking account as payment on a note payable. The interest portion of that payment is $55 and the principal portion is $400. Blockwood has not recorded the direct withdrawal.
e. Bank service fees of $29 are listed on the bank statement.
f. A deposit of $572 is recorded by the bank on October 13, but it did not belong to Blockwood. The deposit should have been made to the checking account of Hollybuster Video, a separate company.
g. The bank statement includes a charge of $80 for an NSF check. The check is returned with the bank statement, and the company will seek payment from the customer.

Required information

Required:

1. Prepare a bank reconciliation for the Blockwood checking account on October 31, 2018. (Amounts to be deducted should be indicated with a minus sign.)

2. Record the necessary cash adjustments. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Blockwood
Bank Reconciliation Statement
October 31, 2018
Balance as per bank statement		13,079
Add: Deposit in transit		810
Deduct:
Outstanding checks	1255
Wrongly recorded Deposit	572	-1827
Adjusted cash balance		12,062
Balance as per books of account		12,356
Add:
Error in check number (412-142)		270
Deduct:
Payment on a note payable	400
Interest portion on note payable	55
NSF Check	80
Service charges	29	-564
Adjusted cash balance		12,062

Blockwood
Journal entries
Date	Account title & explanation	Debit	Credit
1	Cash	270
	Utility payable		270
	(To Adjusted correct entry for Payment of utility.)
2	Note payable	400
	Cash		400
	(To record Note payable.)
3	Interest expense	55
	Cash		55
	(To record interest expense on notes payable.)
4	Account receivable	80
	Cash		80
	(To record non-sufficient funds check.)
5	Service charges	29
	Cash		29
	(To record Service charges.)