Question

1. The October 31 cash balance in the general ledger is $825.

2. The October 31 balance shown on the bank statement is $375.

3. Checks issued but not returned with the bank statement were No. 462 for $21 and No. 483 for $43.

4. A deposit made late on October 31 for $438 is included in the general ledger balance but not in the bank statement balance.

5. Returned with the bank statement was a notice that a customer's check for $67 that was deposited on October 25 had been returned because the customer's account was overdrawn.

6. During a review of the checks that were returned with the bank statement, it was noted that the amount of Check No. 471 was $65 but that in the company's records supporting the general ledger balance, the check had been erroneously recorded as a payment of an account payable in the amount of $56.

Required:

a. Prepare the adjusting journal entry that should be prepared to reflect the reconciling items. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

What is the amount of cash to be included in the October 31 balance sheet for the bank account reconciled?

Answer 1

Solution a:

Journal Entries
S.No	Particulars	Debit	Credit
a.	No Journal entry required.
b.	No Journal entry required.
c.	No Journal entry required.
d.	No Journal entry required.
e.	Accounts Receivable Dr	$67
	To Cash		$67
	(To record customer's check returned due to insufficient funds)
f.	Accounts Payable Dr ($65 - $56)	$9
	To Cash		$9
	(To correct incorrect recording of Check no. 471)

Solution b:

Cash to be included in the October 31 balance sheet = October 31 cash balance - $67 - $9

= $825 - $67 - $9

= $749