Question

The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017. On July 31, the company’s Cash account has a $25,758 debit balance, but its July bank statement shows a $28,299 cash balance. Check No. 3031 for $1,600 and Check No. 3040 for $792 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $576 and Check No. 3069 for $2,368, both written in July, are not among the canceled checks on the July 31 statement. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent expense was correctly written and drawn for $1,240 but was erroneously entered in the accounting records as $1,230. The July bank statement shows the bank collected $5,500 cash on a noninterest-bearing note for Branch, deducted a $28 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement. The bank statement shows an $805 charge for a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF. The July statement shows a $8 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received. Branch’s July 31 daily cash receipts of $6,652 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

Answer 1

				Bank Reconciliation
Bank Statement balance				28,299	Book Balance					25,758
Add					Add:
Deposit of July 31			6,652		Proceeds of note less collection charge				5472
				6,652						5,472
				34,951						31,230
Deduct:					Deduct:
check no 3031			1,600		NSF Check				805
check no 3065			576		Service Charge				8
check no 3069			2,368		Error (Check 3056)				10
				4,544						823
Adjusted bank balance				30,407						30,407
			Journal Entries
	Date	General Journal					Debit	Credit
	uly 31	Cash					5,472
		Collection expense					28
		Note receivable						5,500
		(being note collected)
	31-Jul	Account receivable-shaw					805
		cash						805
		(being NSF)
	31-Jul	Miscellaneous expense					8
		cash						8
		(being service charge)
	31-Jul	Rent expense					10
		cash						10
		(beig error rectified)