Question

On April 30, First Blade receives its bank statement. The bank statement balance of cash as of April 30 is $3,490. The company deposits its receipts in the bank and makes all payments by check. There is a $110 debit memo on the bank statement. This is for an NSF check written by one of the company’s customers, R. Jacobs for $100 plus a bank fee of $10. The April 29th deposit for $154 was recorded in the company’s cash account for $145. There is a $1000 credit memo on the bank statement. This is for a note receivable collected by the bank on behalf of the company. The note is for customer A. Tolbert and is $900 principle plus $100 of interest. On the same day, the bank withdrew $40 from the company’s account as a fee for collecting the note receivable. There are two other debit memos on the bank statement, the first for $35 for a bank service charge on April 30 and the second for $80 for a check printing charge on April 20. On April 30 the bank credited the company’s account for $8 for interest earned. The Ledger balance of cash as of April 30 is $967. Outstanding checks as of April 30 are number 1945 for $3,021 and number 1487 for $200. The accountant notes that the deposit made on April 30 for $1,450 does not appear on the bank statement. I

Instructions:
1. Complete the bank reconciliation as of April 30 using the information above.
2. Prepare the necessary journal entries that affected the ledger balance of cash.

Answer 1

1.

FIRST RECEIVES
Bank Reconciliation
April 30
Bank Statement balance		$ 3,490	Book balance		$     967
Add:			Add:
Deposit in transit	$ 1,450		Error in recording of deposit ($154-$145)	$      9
		$ 1,450	Note received by bank	$ 900
			Interest income ($100+$8)	$ 108
					$ 1,017
Deduct:			Deduct:
Outstanding checks	$ 3,221		NSF Check	$ 100
		$ 3,221	Bank service charges ($10+$40+$35+$80)	$ 165
					$     265
Adjusted bank balance		$ 1,719	Adjusted book balance		$ 1,719

2.

Date	Title	Debit	Credit
	Cash	$          9
	Deposits		$      9
	Cash	$ 1,000
	Note receivable		$ 900
	Interest income		$ 100
	Cash	$          8
	Interes income		$      8
	Accounts receivable	$     100
	Cash		$ 100
	Misc. expenses	$     165
	Cash		$ 165

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