Question

In: Accounting

Reebles Food Store developed the following information in recording its bank statement for the month of...

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

———————————————————————————————————————————

(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

Solutions

Expert Solution

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)

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