Question

Cash

Date 2015	Explanation	Ref	Debit	Credit	Balance
June 1	Balance				2,657
1			750		3,407
3	Check #600			625	2,782
3	Check #601			95	2,687
8	Check #602			56	2,631
9			1,050		3,681
13	Check #603			425	3,256
20			155		3,411
28	Check #604			297	3,114
28			110		3,224

PREMIER BANK

Statement of Account—Cookie Creations Inc.

June 30, 2018

Date	Explanation	Checks and Other Debits	Deposits	Balance
May 31	Balance			3,256
June 1	Deposit		750	4,006
6	Check #600	625		3,381
6	Check #601	95		3,286
8	Check #602	56		3,230
9	Deposit		1,050	4,280
10	NSF check	100		4,180
10	NSF–fee	35		4,145
14	Check #603	452		3,693
20	Deposit		125	3,818
23	EFT–Telus	85		3,733
28	Check #599	361		3,372
30	Bank charges	13		3,359

1. On May 31, there were two outstanding checks: #595 for $238 and #599 for $361. 2. Premier Bank made a posting error to the bank statement: check #603 was issued for $425, not $452. 3. The deposit made on June 20 was for $125 that Natalie received for teaching a class. Natalie made an error in recording this transaction. 4. The electronic funds transfer (EFT) was for Natalie’s cell phone use. Remember that she uses this phone only for business. 5. The NSF check was from Ron Black. Natalie received this check for teaching a class to Ron’s children. Natalie contacted Ron and he assured her that she will receive a check in the mail for the outstanding amount of the invoice and the NSF bank charge. Instructions

(a) Prepare Cookie Creations’ bank reconciliation for June 2018.

(b) Prepare any necessary general journal entries.

(c) If a balance sheet is prepared for Cookie Creations Inc. at June 30, 2018, what balance will be reported as cash in the current assets section?

Answer 1

(a)

COOKIE CREATIONS INC
Bank Reconciliation
June 30, 2018
Balance as per bank statement $		3359
Add:
Deposit in transit	110
Error in recording check no. 603 ($452 - $425)	27	137
		3496
Less:
Outstanding checks
No. 595	238
No. 604	297	535
Adjusted balance as per bank statement $		2961
Cash balance as per books $		3224
Add:
		0
		3224
Less:
NSF check returned	100
NSF fee	35
Bank service charges	13
Error in recording June 20 deposit ($155 - $125)	30
EFT	85
		263
Adjusted cash balance as per books $		2961

(b)

Date	Account Titles and Explanation	Debit	Credit
Jun. 30, 2018	Accounts receivable-Ron Black	135
	Cash		135
	(To record NSF check and fees)
Jun. 30, 2018	Bank service charges	13
	Cash		13
	(To record bank service charges)
Jun. 30, 2018	Fees revenue	30
	Cash		30
	(To rectify error in recording deposit)
Jun. 30, 2018	Telephone expenses	85
	Cash		85
	(To record EFT for telephone expense)

(c) Cash balance in current assets section of balance sheet at June 30, 2018: $2961.

The adjusted balance per books is reported in the balance sheet.