In: Accounting
Reebles Food Store developed the following information in recording its bank statement for the month of March.
Balance per books March 31 $3,622
Balance per bank statement March 31 $11,400
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(1) Checks written in March but still outstanding $8,000.
(2) Checks written in February but still outstanding $3,200.
(3) Deposits of March 30 and 31 not yet recorded by bank $7,200.
(4) NSF check of customer returned by bank $700.
(5) Check No. 210 for $591 was correctly issued and paid by bank but incorrectly entered in the cash payments journal as payment on account for $519.
(6) Bank service charge for March was $50.
(7) A payment on account was incorrectly entered in the cash payments journal and posted to the accounts payable subsidiary ledger for $834 when Check No. 318 was correctly prepared for $384. The check cleared the bank in March.
(8) The bank collected a note receivable for the company for $4,000 plus $150 interest revenue.
Instructions:
a) Prepare a bank reconciliation at March 31.
b) Prepare any adjusting entries necessary as a result of the bank reconciliation
Bank Reconciliation
Balance as per bank statement |
11,400 |
Balance as per book |
3,622 |
add : |
add: |
||
Deposit in transit |
7,200 |
Collection of note and interest |
4,150 |
Correction of book error |
450 |
||
18,600 | 8,222 | ||
Less : |
Less : |
||
Outstanding checks |
-11,200 |
Bank service charge |
-50 |
Correction of book error | -72 | ||
NSF check |
-700 |
||
Adjusted balance |
$7,400 |
Adjusted balance |
$7,400 |
Journal
Event |
Account Title and Explanation |
Debit |
Credit |
1 |
Accounts receivable |
700 | |
Cash |
700 | ||
(To Received NSF check) |
|||
2 |
Accounts payable | 72 | |
Cash |
72 | ||
(To correct book error) |
|||
3 |
bank service charge |
50 | |
Cash | 50 | ||
(To record bank service charge) |
|||
4 |
Cash |
450 | |
Accounts payable | 450 | ||
(To record book error) |
|||
5 | `Cash | 4,150 | |
Note receivable | 4,000 | ||
Interest revenue | 150 | ||
(To received collection of note and interest revenue) |