Question

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The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2016.

On July 31, the company’s Cash account has a $24,752 debit balance, but its July bank statement shows a $26,583 cash balance.

Check No. 3031 for $1,320 and Check No. 3040 for $652 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 $436 and Check No. 3069 for $2,088, 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 was correctly written and drawn for $1,240 but was erroneously entered in the accounting records as $1,230.

A credit memorandum enclosed with the July bank statement indicates the bank collected $7,000 cash on a non-interest-bearing note for Branch, deducted a $35 collection fee, and credited the remainder to its account. Branch had not recorded this event before receiving the statement.

A debit memorandum for $805 lists 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.

Enclosed with the July statement is a $11 debit memorandum for bank services. It has not yet been recorded because no previous notification had been received.

Branch’s July 31 daily cash receipts of $8,152 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of July 31, 2016. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Answer 1

BRANCH COMPANY
Bank Reconciliation
31-Jul-16
Bank statement balance		$26,583	Book balance		$24,752
Add:			Add:
Deposit of July 31	$8,152		Proceeds of note less collection charge	$6,965
		8152			6965
		$34,735			31717
Deduct:			Deduct:
Check No. 3031	1,320		NSF check including fee	805
Check No. 3065	436		Service charge	11
Check No. 3069	2,088		Error (Check 3056)	10
		3844			826
Adjusted bank balance		$30,891	Adjusted book balance		30891
Transaction	General Journal	Debit	Credit
a.	No journal entry required
b.	No journal entry required
c.	Rent expense	10
	Cash		10
d.	Cash	6,965
	Collection expense	35
	Notes receivable		7,000
e.	Accounts receivable—E. Shaw	805
	Cash		805
f.	Miscellaneous expenses	11
	Cash		11
g.	No journal entry required